Casino operator MGM Resorts International has agreed to sell its iconic Bellagio Las Vegas property and form a joint venture with Blackstone Real Estate Income Trust, in a deal worth $4.25bn.
Under the agreement, the joint venture will acquire the Bellagio real estate and lease it back to a subsidiary of MGM Resorts for initial annual rent of $245m.
MGM Resorts will receive a 5% equity interest in the new joint venture and cash of approximately $4.2bn. The operator said it expects the deal to go through before the end of the year, subject to certain closing conditions.
Meanwhile, MGM Resorts has entered into an agreement to sell its Circus Circus property, also in Las Vegas, for $825m to an affiliate of Treasure Island owner Phil Ruffin.
The purchase price comprises $662.5m in cash and a $162.5m note due 2024, with MGM Resorts expecting the deal to go through in the current quarter, subject to certain closing conditions.
MGM Resorts chief executive and chairman, Jim Murren, said the operator will use the proceeds from both deals to “build a fortress balance sheet and return capital to shareholders”.
“These transactions enhance the company’s strategic and operational flexibility and reinforce its commitment to targeted new growth opportunities, including securing and investing in one of the integrated resort licenses in Japan and becoming an industry leader in sports betting in the US,” Murren said.
“MGM Resorts has engaged in an exhaustive process to evaluate its owned real estate and remains committed to executing its asset-light strategy in a measured way that maximizes value for its shareholders.
“We remain committed to delivering on our 2020 goals and continue to be on track to achieve our previously announced targets.”
Jon Gray, the president and chief operating officer of Blackstone, added: “As big believers in MGM Resorts and Las Vegas, we are thrilled to partner with MGM to acquire the Bellagio on behalf of our BREIT investors. We look forward to a long and productive partnership with this world-class company.”
The two sale agreements come as MGM Resorts continues to expand outside of its traditional land-based remit, with the operator’s Roar Digital joint venture with GVC Holdings having last month launched its BetMGM online sports betting and gaming app in New Jersey.
BetMGM replaced the PlayMGM app that was introduced in the state by MGM in 2017, and features the new GVC sportsbook platform as well as a range of traditional casino and poker games previously offered through PlayMGM.
Roar Digital also recently agreed a deal with US sports bar and restaurant chain Buffalo Wild Wings to jointly deliver sports betting experiences to punters across the country.
Image: Dave Warfel