It’s winner take all: VICI Properties Inc., 50.1% owner of the joint venture that owns MGM Grand Las Vegas and Mandalay Bay Resort, has agreed to acquire Blackstone Real Estate Income Trust Inc. (BREIT)’s 49.9% interest in the venture for approximately $1.27 billion in cash and the assumption of BREIT’s pro-rata share of the existing property-level debt. The property-level debt has a principal balance of $3.0 billion.
The transaction is expected to be completed early in the first quarter of 2023.
MGM Grand Las Vegas and Mandalay Bay feature: over 18 million building square feet; approximately 11,000 guestrooms and suites (including Four Seasons and Delano hotels); approximately 321,000 square feet of gaming space and approximately 3.0 million gross square feet of exhibition and meeting facilities. The properties, situated at the south end of the Las Vegas Strip in Las Vegas, Nevada, are subject to an existing 27-year, triple-net lease agreement between the joint venture and MGM Resorts International. The lease will generate annual rent of approximately $310 million upon the commencement of the next rental escalation on March 1, 2023.
“VICI Properties has been an outstanding partner on these assets and we are incredibly pleased to have delivered such exceptional returns for our BREIT investors,” said Jon Gray, president and chief operating officer of Blackstone. “Las Vegas continues to be a high conviction market for Blackstone.”
A specialist in the gaming sector, VICI’s Las Vegas portfolio includes Casars Palace, Excalibur, Harrah’s, Luxor, New York-New York, Park MGM, The Mirage and The Venetian. It intends to fund this transaction through a combination of cash on hand, proceeds from the settlement of existing outstanding forward equity sale agreements and assumption of the remaining 49.9% of the existing property-level debt.
Edward Pitoniak, chief executive officer of VICI Properties said, “We’re excited to further our investment in MGM Grand Las Vegas and Mandalay Bay, two of the largest and highest-quality resorts in what we believe is the leisure and convention destination with the most compelling future demand outlook. This transaction also provides us with the opportunity to further grow our partnership with MGM Resorts International as they look to capitalize on the growing vitality of the South Strip.”
PJT Partners and Barclays are serving as BREIT’s financial advisors, and Simpson Thacher & Bartlett LLP is acting as BREIT’s legal counsel. Morgan Stanley & Co. LLC is acting as exclusive financial advisor to VICI Properties, and Hogan Lovells is serving as legal advisor to VICI Properties.
