The largest property proprietor on the Las Vegas Strip is doubling down and taking full possession of the MGM Grand Las Vegas and Mandalay Bay, which the deal values at $5.5 billion.
VICI Properties, an actual property funding belief primarily based in New York, has agreed to purchase Blackstone’s 49.9% stake within the two Las Vegas on line casino resorts. VICI at the moment owns a 50.1% stake within the property, which it acquired when it purchased MGM Growth properties in May.
The transaction is anticipated to shut in early 2023.
Appearing on CNBC’s Power Lunch, VICI Properties CEO Ed Pitoniak mentioned Blackstone approached him only a couple weeks in the past, and that the deal got here collectively shortly.
“We were very excited about the opportunity. Obviously it simplifies our structure, but it gives us total ownership of two of the most iconic assets on the Las Vegas strip the MGM Grand and Mandalay Bay,” Pitoniak mentioned.
Blackstone Real Estate Investment Trust, often known as BREIT, mentioned Thursday that it determined to restrict withdrawals after it noticed redemptions in October that exceed their month-to-month limits. Blackstone shares dropped nearly 10% on the news.
But what was an issue for Blackstone could also be a chunk of excellent luck for VICI.
“We like the deal as it simplifies VICI’s structure and highlights VICI’s multiple paths for growth despite the company’s larger base and a rising interest rate environment,” Truist analyst Barry Jonas wrote in a consumer observe.
Gaming REITS resembling VICI personal the buildings and the land of casinos and resorts. Gambling firms, resembling Caesars and MGM Resorts − each tenants of VICI − personal the operations.
MGM Grand Las Vegas and Mandalay Bay, situated on the south finish of the Strip, embrace greater than 11,000 lodge rooms, 321,000 sq. ft of gaming flooring, and three million sq. ft of assembly amenities.
VICI is placing in additional than a $1 billion in money, and assuming greater than $3 billion of Blackstone debt at a 3.56% fee via 2032. Pitoniak referred to as {that a} whole lot at a time when VICI may need anticipated to pay 6%.
VICI’s CEO says he is bullish on Las Vegas’s continued development, pointing to a packed conference and leisure calendar subsequent 12 months, and attention-getting sports activities occasions together with F1 in November 2023.
Despite the sale, Blackstone COO Jay Gray mentioned Las Vegas continues to be a excessive conviction marketplace for Blackstone, which additionally owns the bodily property of the Cosmopolitan and Bellagio.
Many analysts and traders are additionally bullish on the alternatives for development in Las Vegas.
October marked the twentieth straight month of $1 billion or extra in state gaming income, in keeping with figures launched by the Nevada Gaming Control Board.
Strip casinos are seeing a 20% surge in income via October to $6.8 billion in gaming income from a 12 months in the past.
Las Vegas can be attracting a report variety of guests. Harry Reid International noticed greater than 5 million passengers for the primary time ever in October.
“It’s further evidence that Las Vegas remains amongst the most in-demand destinations in the world,” mentioned Rosemary Vassiliadis, Clark County’s director of aviation.
And lodge income in Las Vegas was up 51% in October in contrast with October 2019, earlier than the pandemic, in keeping with the Las Vegas Convention and Visitors Authority.
Deutsche Bank, which has a “buy” score on the inventory, raised its worth goal to $38 following news of the transaction.