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Blackstone Real Estate Income Trust (BREIT) and VICI Properties jointly announced they have entered into a definitive agreement.
VICI was already the primary property owner of a 50.1% interest in the joint venture that possesses MGM Grand Las Vegas and Mandalay Bay Resort. VICI is now taking full ownership of the two properties.
The deal, valued at $5.5 billion makes it one of the year’s biggest Las Vegas casino transactions.
VICI Properties has agreed to buy BREIT’s 49.9% interest in the joint venture for a cash consideration of approximately $1.27 billion.
The company will also buy its assumption of BREIT’s existing property-level debt with a principal balance of $3.0 billion. It matures in 2032 and comes with a fixed interest rate of 3.558% annually through March 2030.
VICI Properties expects to close the transaction in the first quarter of 2023 and also owns:
- Caesars Palace Las Vegas
- MGM Grand
- The Venetian Resort Las Vegas
2 Las Vegas casinos are subject to a triple-net lease agreement
MGM Grand Las Vegas and Mandalay Bay are subject to an existing triple-net lease agreement. The agreement is between the joint venture and MGM Resorts International.
The lease will generate annual rent of nearly $310 million upon the commencement of the following rental escalation on Mar. 1, 2023.
Jon Gray, president and Chief Operating Officer of Blackstone, said: “VICI Properties has been an outstanding partner on these assets and we are incredibly pleased to have delivered such exceptional returns for our BREIT investors. Las Vegas continues to be a high conviction market for Blackstone.”
VICI Properties’ CEO, Edward Pitoniak, added:
“We’re excited to further our investment in MGM Grand Las Vegas and Mandalay Bay, two of the largest and highest-quality resorts in what we believe is the leisure and convention destination with the most compelling future demand outlook.
This transaction also provides us with the opportunity to further grow our partnership with MGM Resorts International as they look to capitalize on the growing vitality of the South Strip.”
Scott Trebilco, senior managing director of Blackstone Real Estate, commented: “The sale of these assets is an excellent outcome for our BREIT investors and enables us to further concentrate BREIT’s portfolio in its highest growth sectors, including logistics and rental housing.”
The latest high-priced acquisition on the Vegas Strip by VICI
In January 2020, MGM Resorts sold MGM Grand Las Vegas and Mandalay Bay real estate. The sale was to a joint venture between its spinoff REIT, MGM Growth Properties and BREIT.
Although Blackstone purchased the properties from MGM Resorts in 2020, MGM Resorts continued to own the casino business.
Last year, VICI agreed to buy MGM Growth Properties in a $17.2 billion deal. That deal established its 50.1% stake in these two Las Vegas casino properties.
The AAA Four Diamond Resorts, MGM Grand Las Vegas and Mandalay Bay, currently feature:
- Over 18 million building square feet
- About 11,000 guestrooms and suites (including Four Seasons and Delano hotels)
- Approximately 321,000 square feet of gaming space with 191 table games and 2,235 slot machines and electronic table games
- Approximately 3 million gross square feet of state-of-the-art exhibition and meeting facilities
- Multiple Michelin Star winning restaurants, The Mansion at MGM Grand
- Various entertainment venues, the MGM Grand
- Garden Arena, Hakkasan Night Club, Topgolf, and destination pools and spas
- Situated on 226 well-located acres on the Las Vegas Strip
MGM Grand Las Vegas and Mandalay Bay are located at the south end of the Las Vegas Strip.
