MGM Grand & Bellagio Potential Sale
Two of the biggest and most well known Las Vegas casino/resorts are apparently on the market to be sold. According to Bloomberg, Blackstone Group Inc. is in “advanced talks” to purchase and then lease back MGM Grand Las Vegas and Bellagio from MGM Resorts International, their current owner.
Under a potential deal, Blackstone would own the two massive hotels, but MGM Resorts International would continue to manage the properties. The sale could potentially generate $7 billion in cash for MGM Resorts International which would allow them to potentially expand to Japan and elsewhere.
Between MGM Grand and Bellagio, Blackstone would be purchasing 10,000 rooms and over 300,000 square feet of casino space. They also own Cosmopolitan Las Vegas, another huge Strip property with over 3,000 hotel rooms and 110,000 square feet of casino space.
No Final Deal Reached
Neither Blackstone nor MGM Resorts International would comment to Bloomberg and apparently no final deal has been reached, but it is clear that MGM is looking to unload some properties in order to free up cash for expansion. Given that we don’t know the terms, it is impossible to say whether this is a good move or not, but the thought of two of the company’s most iconic properties being owned by someone else is a bit jarring.
The sale comes at an interesting time as well in my opinion. Blackstone clearly has a long history of successful investments, but I am surprised to see them pursuing the Vegas market so strongly given the economic uncertainty and Vegas’ reliance on tourism and corporate events. The city was hit hard during the last recession and those purchase prices aren’t exactly cheap.
No matter what happens with the potential sale of Bellagio and MGM Grand Las Vegas, I think one thing is definitely clear. Between the proposed Caesars Entertainment merger with Eldorado and developments like this one, the landscape of Vegas is changing once again. What that means for the long term remains to be seen, but it’s going to be a fun ride.
Oh and let’s hope they don’t turn the Bellagio fountains into a shopping mall.
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The plan is to sell the property to Blackstone Group and then charge MGM rent. This gives MGM short term boost in cash and less tax liability as Blackstone would carry the property tax. Big bet on the part of Blackstone as property values are very dynamic in Vegas.
I wonder if they will charge the buyers a resort fee after they agree on the price?
I see what you did there.
The casinos may have the advantage, but resort fees are a losing bet for the Las Vegas tourism. MGM and Ceasars need to generate cash to satisfy debt obligations.
They need to look to new ways to get people back.
There’s a current rumor that they just sold Circus Circus to Phil Ruffin, the owner of TI, and that announcement is pending.
Wow just saw that rumor. Very interesting.
Do you think that this may be to generate cash to pay the lawsuits from the hundreds of people who were shot from an MGM hotel?
That could be part of it, although I assume they have insurance to cover a lot of that. They do need to free cash flow to expand and they also have a lot of debt as well.