MGM Growth Properties, Blackstone REIT to Buy MGM Grand, Mandalay Bay Casinos in Las Vegas for $4.6B

by John Nelson

LAS VEGAS — MGM Growth Properties has agreed to form a joint venture with Blackstone Real Estate Income Trust Inc. to acquire the Las Vegas real estate assets of the MGM Grand and Mandalay Bay casinos and resorts for $4.6 billion. MGM Growth (NYSE: MGP) will own 50.1 percent of the joint venture, and Blackstone Real Estate, a non-traded REIT managed by Blackstone (NYSE: BX), will own 49.9 percent.

The MGM Grand and Mandalay Bay comprise 9,743 hotel rooms combined, as well as approximately 3 million square feet of meeting space and approximately 300,000 square feet of casino space across 226 acres on the Las Vegas Strip. MGM Growth currently owns the Mandalay Bay’s real estate, and MGM Resorts International (NYSE: MGM) currently owns the MGM Grand’s real estate.

At closing, which is expected to occur this quarter, MGM Resorts will enter into a long-term, triple-net master lease with the new ownership for both properties and provide a full corporate guarantee of rent payments. MGM Resorts’ initial annual rent for both venues will be $292 million.

MGM Resorts will continue to operate Mandalay Bay Resort and Casino on the Las Vegas Strip.

MGM Resorts will continue to manage and operate all aspects of the properties on a day-to-day basis, with the joint venture owning the properties and receiving rent payment.

MGM Growth Properties is a REIT focused on the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts. The company currently owns a portfolio of 11 destination resorts in Las Vegas and elsewhere across the United States.

MGM Growth’s stock price closed on Monday, Jan. 13 at $31.57 per share, up from $28.37 a year ago.

In a separate deal, Blackstone Real Estate Income Trust plans to purchase $150 million in Class A shares of MGM Growth.

Blackstone Real Estate Income Trust is an institutional real estate investment platform that is externally managed by a subsidiary of Blackstone (NYSE: BX). Blackstone’s real estate business was founded in 1991 and has approximately $157 billion in investor capital under management.

A few months ago, Blackstone Real Estate Income Trust acquired the famous Bellagio in Las Vegas for more than $4.2 billion in a 95/5 joint venture with the casino’s former owner and current operator MGM Resorts.

Blackstone’s stock price closed at $58.43 on Monday, Jan. 13, up from $31.98 a year ago.

— John Nelson

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