The cosmopolitan sale of the latest billion dollar Las Vegas Strip deal

The multi-billion dollar sale of The Cosmopolitan of Las Vegas hasn’t just put the flashy, once financially troubled resort into new hands.

It is also the latest in a series of hotel deals on the Strip between two powerful companies and another Las Vegas Boulevard investment from the CEOs of fast food chain Panda Express.

New York financial conglomerate Blackstone said on Monday it was selling Cosmopolitan for $ 5.65 billion, nearly $ 4 billion more than its purchase price several years ago. As part of the deal, casino giant MGM Resorts International is acquiring the Cosmopolitan’s operations for more than $ 1.6 billion, while a trio of groups, including Blackstone, will own the real estate and collect rents from the new operator.

Under the terms of its lease, MGM said, it will pay an initial annual rent of $ 200 million.

The transaction is expected to be finalized next year.

MGM and Blackstone have signed several multi-billion dollar deals on the Strip over the past few years as the famous tourist corridor transforms into a collection of leased megastations stretching across several miles.

Such offers likely have little to no impact on hotel guests or employees, as they primarily involve sending rent checks to a new business. The Cosmopolitan sale, however, will place the approximately 3,000-room two-tower complex under a new operator – one that already operates several leading hotel-casinos on the Strip.

“The Cosmopolitan brand is recognized around the world for its unique customer base and high quality products and experiences, which makes it an ideal addition to our portfolio and reinforces our vision to be the world’s premier gaming entertainment company.” , Bill, President and CEO of MGM Resorts. Hornbuckle said in a press release.

“Irreplaceable location”

As part of the deal, Cosmopolitan’s real estate will be owned by Blackstone, investment firm Stonepeak Partners and Cherng Family Trust, the family office of Panda Express operators Andrew and Peggy Cherng.

Neither Blackstone nor MGM disclosed the owners’ individual stakes in the property in press releases on Monday.

Tyler Henritze, head of real estate acquisitions in America for Blackstone, said in a press release that the transaction “underscores Blackstone’s ability to acquire and transform large and complex assets.”

Phill Solomond, Stonepeak’s real estate manager and former managing director of Blackstone, said in a statement that the Cosmopolitan is “a solid asset with an irreplaceable location, sustainable cash flow and further upside potential.”

Meanwhile, the Cherngs, co-chairs and co-CEOs of Panda Restaurant Group, have already dealt with MGM.

In 2018, they acquired what is now the Waldorf Astoria Las Vegas from MGM and its partner in the CityCenter multiturn complex for $ 214 million.

The Cherngs were unable to comment on the sale of Cosmopolitan, a representative from Panda Restaurant Group said.

Billion dollar offers

New York developer Ian Bruce Eichner broke new ground on the Cosmopolitan during the frenzied real estate bubble of the mid-2000s. But the economy quickly deteriorated and project lender Deutsche Bank seized the partially built complex in 2008.

The German financial giant finished construction and opened the property in late 2010 amid the worst recession in decades. The Cosmopolitan has proven to be a trendy gathering place, but was deep in the red, losing an average of nearly $ 100 million a year from 2011 to 2013, according to a headlines file.

Blackstone, which had previously launched a real estate buying spree in southern Nevada after the market imploded and collapsed real estate values, acquired the Cosmopolitan in 2014 for $ 1.73 billion.

The total cost of developing the Cosmopolitan had exceeded $ 4 billion, and Blackstone spent around $ 500 million on improvements, the company told the Review-Journal.

Even before the Cosmopolitan sale announcement on Monday, Blackstone had a history of big Las Vegas deals with MGM.

As announced in July, Blackstone struck a deal to buy the Aria and Vdara hotels for nearly $ 3.9 billion from MGM Resorts and re-lease them to the casino operator.

Blackstone also partnered with MGM Resorts’ real estate spin-off, MGM Growth Properties, in a $ 4.6 billion deal early last year to acquire MGM Grand and Mandalay Bay and rent them to MGM Resorts.

Additionally, Blackstone bought the Bellagio in 2019 for around $ 4.2 billion from MGM Resorts and re-let it.

Contact Eli Segall at [email protected] or 702-383-0342. To follow @eli_segall on Twitter.

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