• Sat. Jul 24th, 2021

MGM Buys Half of CityCenter, Sells Aria, Vdara Actual Property to Blackstone for $3.89B


Jul 2, 2021

Posted on: July 1, 2021, 10:10h. 
Final up to date on: July 1, 2021, 12:02h.

Todd Shriber Learn Extra

MGM Resorts Worldwide (NYSE:MGM) is busy once more on the Las Vegas Strip. It introduced as we speak that it’s buying the 50 % of CityCenter it didn’t beforehand personal, and is promoting the property property of Aria and Vdara.

MGM’s Aria on the Vegas Strip, pictured above. The corporate is promoting that venue and Vdara to Blackstone. (Picture: YouTube)

The on line casino operator is paying $2.12 billion to Infinity World Improvement for the 50 % curiosity in CityCenter, valuing the advanced within the coronary heart of the Strip at $5.8 billion. That’s based mostly on web debt of $1.5 billion when accounting for a lately offered two-acre piece of land for $80 million.
When that transaction wraps up — in what some actual property market consultants are calling a shocking transfer — the gaming firm will promote the property of Aria and Vdara to non-public fairness agency Blackstone (NYSE:BX) for $3.89 billion in money.

The Blackstone, Vdara and Aria new information is an entire shock,” stated James Harris, senior managing director at Helmsley Spear, in an interview.

He notes previous to the coronavirus pandemic, MGM CEO Invoice Hornbuckle expressed no real interest in promoting the 2 venues, “significantly at what seems to be a discount value.”
Aria, Vdara Worth: Is It Proper?
Whereas knowledge confirms Las Vegas is recovering from the pandemic, some analysts could debate the pricing and timing of the Aria/Vdara divestment. Might’s gross gaming income (GGR) figures from the Nevada Gaming Management Board hit a file.
Although it’s making progress, the home gaming trade isn’t all the way in which again from the worldwide well being disaster and up to date venue gross sales in Sin Metropolis haven’t fetched inspiring costs. In reality, some operators that have been broadly anticipated to promote Strip properties this yr look like opting towards such strikes, maybe owing to still-depressed pricing on gaming actual property.

It is probably not an apples-to-apples comparability, however the $3.89 billion MGM is commanding for Aria and Vdara is lower than the $4.25 billion it offered Bellagio to Blackstone for in October 2019. It’s additionally properly beneath the $4.6 billion the gaming firm hauled in when it parted with the property property of Mandalay Bay and MGM Grand in January 2020. Blackstone was a part of that transaction as properly.

Nonetheless, the sale jibes with MGM’s long-standing asset-light technique, and with a distinction of greater than $1.7 billion between what it’s paying for half of CityCenter and what Aria and Vdara are being offered for, the on line casino big provides to what’s already one of many trade’s largest money stockpiles.
Blackstone: Howard Hughes of the Strip?
As for the personal fairness firm, it’s cobbling collectively a powerful portfolio of glitzy Strip actual property.
“The query now could be this, What does Blackstone see in Las Vegas revenues future that it’s compiling a nook on the Strip Gaming market?,” Harris stated. “All they want is Wynn and they’re going to rule Las Vegas as in the event that they have been a company Howard Hughes. What’s Blackstone’s end-game?”
After the Aria/Vdara transaction closes within the third quarter, Blackstone will personal the actual property of these venues and Bellagio, together with its partial stakes in Mandalay Bay and MGM Grand, in addition to its outright possession of Cosmopolitan.
MGM is leasing again Aria and Vdara from Blackstone at an preliminary annual hire of $215 million. The $3.89 billion price ticket represents a a number of of 18.1x hire.

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