Blackstone pledges to sell Cosmopolitan Hotel, Casino in Las Vegas to MGM for $ 5.6 billion

Blackstone initially bought The Cosmopolitan, located on the Las Vegas Strip, in 2014 for $ 1.6 billion. (image courtesy of Wikimedia Commons)

LAS VEGAS – Blackstone (NYSE: BX) has entered into an agreement to sell The Cosmopolitan Hotel and Casino in Las Vegas to MGM Resorts International (NYSE: MGM) for $ 5.6 billion.

Blackstone initially acquired The Cosmopolitan in 2014 for around $ 1.6 billion, according to The Wall Street Journal. The company subsequently invested more than $ 500 million in capital improvements to renovate the property’s 3,000 existing hotel rooms; add 67 new rooms and suites; improve and expand the supply of food and drink; and modernize common areas and leisure areas.

Under the terms of the agreement, MGM will acquire the operations of The Cosmopolitan and sign a long-term net lease with a partnership between Cherng Family Trust, alternative investment firm Stonepeak Partners and Blackstone Real Estate Income Trust Inc. is expected to be concluded in early 2022.

The newspaper also reported that as of Friday, September 24, hotel rooms at the Cosmopolitan have been 87% occupied in the current month, with an average daily rate of $ 448.

The Cosmopolitan opened in 2010. In addition to its 3,000+ hotel rooms, the development includes a 110,000 square foot casino; 300,000 square feet of retail and restaurant space; 150,000 square feet of meeting and event space; a 3,200-seat theater; three swimming pools; and a 40,000 square foot spa and fitness center.

“As owners of The Cosmopolitan, we have invested strategic capital and brought our expertise and experience in the accommodation industry to create the most dynamic destination on the Las Vegas Strip,” said Tyler Henritze, Head of Americas acquisitions for Blackstone.

“The Cosmopolitan management team and employees, led by CEO Bill McBeath, executed an ambitious business plan, including going through a tough time for the industry as a whole, perfectly to position the property. for such a level of success, ”he adds.

According to the Las Vegas Convention & Visitors Authority, the market saw a strong rebound in traffic and visitor spending in the first seven months of 2021. In April and May, Las Vegas hosted around 2.5 million and 2, respectively. 8 million visitors for the past year. – annual increases of 2,307 percent and 1,802 percent.

The total hotel occupancy rates for these two months were 65.6% and 70.9%, respectively. The market has since seen its occupancy rate climb even further, registering city-wide rates of 75.9 and 79.4% in June and July, respectively.

Deutsche Bank Securities Inc. and PJT Partners served as financial advisers to Blackstone. Simpson Thacher & Bartlett LLP served as legal counsel to the New York-based real estate giant. Latham & Watkins LLP served as legal counsel to Cherng Family Trust and Stonepeak Partners.

Blackstone’s share price opened at $ 124.28 per share on Monday, September 27, up more than 100% from $ 51.88 per share a year ago. MGM’s share price opened at $ 44.67 per share this morning, from $ 22.61 per share at the end of September 2020.

-Taylor Williams

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