Blackstone Inc. (NYSE: BX) has told investors that it has agreed on the Cosmopolitan casino and hotel sale for $5.65 billion. The asset sale located on the Las Vegas Strip is Blackstone’s most profitable sale for a single asset in its history.
Blackstone bought Cosmopolitan seven years ago
The company paid $1.8 billion for the two-tower complex in 2014 and spent another $500 million on improvements, including remodeling roughly 3,000 guest rooms, creating luxury suites, and opening new bars and restaurants.
According to a letter to fund investors seen by The Wall Street Journal, total gains after the sale would be over $4.1 billion, including operations cash flow. As per the letter, Blackstone made approximately ten times its investment in Cosmopolitan.
The company is selling the asset to MGM Resorts International for $1.6 billion, with the hotel and casino operations sold separately. According to the Blackstone investor letter, the property will be purchased for $4 billion by a partnership that comprises a Blackstone real-estate investment trust.
Additionally, the investor letter indicated that the purchasers’ group also comprises Stonepeak Partners and the Cherng Family Trust, representing the Panda Restaurant Group’s owners.
Series of property sales witnessed in Las Vegas Strip
The transaction is the latest in a series of real-estate sales on the Las Vegas Strip, with casino operators looking to raise funds for expanding operations such as entertainment and sports betting by selling their real estate.
Vici Properties Inc. agreed to acquire MGM Growth Properties in August for $17.2 billion, plus debt. MGM Resorts had spun out MGM Growth Properties earlier but still owns the REIT, Luxor, MGM Grand Las Vegas, and Mandalay Bay in Las Vegas.
At the beginning of the year, Las Vegas Sands Corp. agreed to sell its Las Vegas properties for $6.25 billion to Apollo Global Management Inc. The maiden megacasino on the Las Vegas Strip, which is over ten years old and worth $4.3 billion Resort World, opened this summer.
Normalcy returning in Las Vegas
Despite fears about the Delta strain of the virus, Las Vegas tourism has gradually increased this year. More than 3.3 million visitors visited Las Vegas in July, accounting for over 90% of pre-pandemic visitor numbers for July 2019. Even with state officials reinstating the indoor mask rule for locations with high rates of Covid-19 infection, casinos have resumed indoor dining, including entertainment and buffets.
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