Blackstone Hit the Jackpot in a $5.7 Billion Deal to Sell The Cosmopolitan

MGM Acquires The Cosmopolitan casino for $5.7 Billion from private equity firm Blackstone

By Lucky 33

Blackstone Hit the Jackpot in a $5.7 Billion Deal to Sell The Cosmopolitan

In Las Vegas, skill combined with luck is the best way to come out ahead. That’s how private equity firm Blackstone › $BX › hit the jackpot with a $5.7 billion deal to sell the Cosmopolitan casino. It caught a break when it bought the business seven years ago & is applying its know-how with some slick shuffling.

A day after it unveiled plans to operate The Cosmopolitan of Las Vegas, MGM Resorts International said it closed a sale-leaseback of two other towering hotels on the Strip — Aria, Vdara with the Cosmo’s seller, Blackstone, no less.

Blackstone scooped up the Cosmopolitan after a rocky run in Sin City. Deutsche Bank › DBKGn.DE › which never intended to own a casino, took it over in mid-2008 when the developer defaulted. Las Vegas was in a deep rut after the financial crisis & took ages to recover, according to figures from the city’s Convention & Visitors Authority Research Center. When Blackstone arrived, Cosmopolitan had yet to generate a profit.

Las Vegas was heading in the right direction, however. Clubs & restaurants, including the Cosmopolitan’s Marquee & Eggslut, became attractions beyond the blackjack tables. Visitor numbers blew through pre-crisis levels the year of Blackstone’s acquisition. In the 12 months leading up to Covid-19 lockdowns, the company booked $316 million of EBITDAR, earnings that back out rent & other items, & if the second quarter is any indication, the upcoming year will be even better.

If Blackstone invested a quarter of the original purchase price, or about $400 million, in 2014, the implied return would be an impressive 10 times its money. Even though only half as many people visited Las Vegas in 2020 as in 2019, public market valuations have soared. That suggests Blackstone got a lucky with the timing.

After years of speculations that The Blackstone Group had been looking to offload The Cosmopolitan of Las Vegas, the New York private equity firm announced 27-Sep-21 that it has entered into an agreement to sell the Strip casino resort for $5.65 billion.

Las Vegas-based casino & hospitality giant MGM Resorts International would pay $1.63 billion for The Cosmopolitan’s operations.

Additionally, a partnership that includes the Cherng Family Trust, headed by the family of Panda Express founder Andrew Cherng, real estate investment firm Stonepeak Partners, & Blackstone-controlled Real Estate Income Trust Inc. will pay more than $4 billion the resort’s real estate assets.

The first round of rumors that the buyout firm was looking to sell The Cosmopolitan emerged in 2018. It was reported at the time that Florida-based Hard Rock International was in due diligence to buy the property. However, both Hard Rock & Blackstone denied those rumors promptly & the latter noted that selling the complex was not under consideration at the time.

Blackstone said recently that The Cosmopolitan’s performance over the past several months has been stronger than ever & that it even exceeded pre-pandemic levels in the second quarter of 2021.

The New York private equity company confirmed the sale of its Strip resort a few weeks after Bloomberg reported that it was looking to snatch at least $5 billion for The Cosmopolitan & named Apollo Global Management & MGM Resorts International as potential buyers. The property’s sale is expected to close in the first half of 2022, subject to regulatory approval.

It should be noted that MGM is currently in the process of divesting its Aria Resort & Casino & Vdara Hotel & Spa resorts namely to Blackstone.

In other news › Blackstone › $BX › hired two Wall Street veterans as partners & promoted another executive to work in its Blackstone Credit unit as fresh demand from institutional & retail investors made it the private equity firm's fastest-growing segment. 

Blackstone Secured Lending Fund filed a registration statement for IPO on October 1, 2021. Blackstone Secured Lending Fund is expected to list its common shares on the New York Stock Exchange under the symbol › BXSL.

MGM Blackstone Cosmopolitan Sale Purchase Deal Agreement
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