MGM Resorts reshuffles property portfolio in multi-billion-dollar deals
Casino operator inks $2.125bn deal to acquire CityCenter Holdings while divesting acquired properties to Blackstone in $3.89bn sale/leaseback deal
MGM Resorts has agreed a deal to buy out Infinity World Development Corp.’s 50% share in its JV business, CityCenter Holdings, in a deal worth $2.125bn.
The agreement will make MGM Resorts the 100% owner of the CityCenter campus on the Las Vegas Strip, which is comprised of Aria Resort & Casino and Vdara Hotel and Spa.
The purchase price is based on an implied valuation of $5.8bn and net debts of $1.5bn.
The deal follows CityCenter Holdings’ recent sale of a two-acre site located within the CityCenter development to 63SLVB, LLC for $80m.
Speaking about the deal, MGM Resorts CEO and president Bill Hornbuckle referenced the positive effect on the firm’s strategy going forward.
“Uniting all of CityCenter under MGM Resorts’ corporate structure and strategy will allow us to consolidate financial results,” Hornbuckle explained.
“It builds on efforts to strengthen our operating model and guest experience and further our vision of becoming the world’s premier gaming entertainment company,” the MGM Resorts CEO added.
In tandem with the completion of this deal, MGM has agreed a deal with investment firm Blackstone to monetize the Aria Resort and Vdara Hotel properties.
Under terms of the agreement, funds managed by Blackstone will acquire the Aria and Vdara real estate for $3.89bn in cash, representing a multiple of 18.1x rent.
Following the completion of its deal with Infinity World, both properties will be leased to MGM Resorts based on an initial annual rent of $215m.
Reflecting on the real estate agreement with Blackstone, Hornbuckle highlighted the “unprecedented premium value” of MGM Resorts’ Las Vegas real estate assets.
“We expect to continue executing on our asset-light strategy and utilizing the proceeds from our real estate transactions to enhance our financial flexibility and secure new growth opportunities,” he added.
Blackstone and MGM have been long time partners in real estate with the firms’ MGM Growth Properties and Blackstone Real Estate Income Trust operating a joint venture business geared around property acquisition.
The relationship between the two has seen sale-leaseback deals on iconic Las Vegas hotels including the MGM Grand, Bellagio and the Mandalay Bay hotels.
Speaking about this latest deal, Blackstone Real Estate head of US acquisitions Americas Tyler Henritze said: “This transaction reflects our high conviction in Las Vegas and our strong partnership with MGM Resorts.
“CityCenter is a best-in-class resort and complementary addition to our portfolio of high-quality assets on the Strip.
“We look forward to continuing our productive collaboration with MGM Resorts,” Henritze added.