Realty Income Acquires 21.9 Percent Stake in Bellagio Las Vegas from Blackstone for $950M

by Jeff Shaw

LAS VEGAS — Realty Income Corp. has signed a definitive agreement to acquire common and preferred equity interests from Blackstone Real Estate Income Trust Inc. (BREIT) for $950 million. The transaction forms a new joint venture that owns a 95 percent interest in the real estate assets of The Bellagio Las Vegas, a luxury hotel and casino on the Las Vegas Strip.

Upon closing, Realty Income will invest approximately $300 million of common equity in the joint venture to acquire a 21.9 percent indirect interest in the property. BREIT will retain a 73.1 indirect interest. The operator of the property, MGM Resorts International (MGM), will retain a 5 percent indirect interest. Realty Income will also acquire a yield-bearing preferred equity interest in the joint venture for $650 million. The transaction is expected to close in the fourth quarter of 2023.

The Bellagio features approximately 4,000 guest rooms and suites across two towers, as well as 157,000 square feet of gaming space and 200,000 square feet of meeting and event facilities. The 77-acre campus also includes the Fountains of Bellagio and multiple Michelin Star restaurants. 

MGM operates The Bellagio on a triple-net lease with approximately 26 years of remaining term. The existing lease structure includes 2 percent annual rent escalators for the next six years, the greater of 2 percent or the consumer price index (CPI) average (capped at 3 percent) in the years seven through 16, and the greater of 2 percent or CPI (capped at 4 percent) in years 17 through 26.

“Realty Income seeks to invest in high-quality real estate at scale in partnership with operators who are leaders in their respective industries,” says Sumit Roy, president and CEO of Realty Income.

The Bellagio has property-level debt with an outstanding principal balance of approximately $3 billion at a 3.67 percent fixed all-in interest rate.

PJT Partners served as lead financial advisor to BREIT. Citigroup Global Markets, J.P. Morgan Securities, SG Americas Securities, Desjardins Capital Markets and Mizuho Securities USA provided additional financial advisement. Simpson Thacher & Bartlett LLP is BREIT’s legal counsel.

— Channing Hamilton

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