LAS VEGAS (FOX5) -- MGM Resorts International has announced it has entered a joint venture with Blackstone Real Estate Income Trust to sell and lease the Bellagio.
The joint venture will acquire the Bellagio real estate and lease it back to a subsidiary of MGM Resorts for initial annual rent of $245 million, according to an MGM news release. The deal values the real estate of Bellagio at $4.25 billion, which represents a purchase price multiple of 17.3 times rent. The transaction is expected to close in the fourth quarter of 2019.
"This transaction confirms the premium value of our owned real estate assets, highlights the unique value of Bellagio as a premier asset in gaming and solidifies our status as a premier operator of gaming and entertainment properties," MGM Resorts chairman and CEO Jim Murren said. "We will use the proceeds from this transaction, together with the proceeds from the pending sale of Circus Circus Las Vegas, to build a fortress balance sheet and return capital to shareholders. ... These transactions enhance the Company's strategic and operational flexibility and reinforce its commitment to targeted new growth opportunities, including securing and investing in one of the integrated resort licenses in Japan and becoming an industry leader in sports betting in the U.S. We remain committed to delivering on our 2020 goals and continue to be on track to achieve our previously announced targets."
"As big believers in MGM Resorts and Las Vegas, we are thrilled to partner with MGM to acquire the Bellagio on behalf of our BREIT investors," Blackstone president and COO Jon Gray said. "We look forward to a long and productive partnership with this world-class company."
Between the Bellagio deal and the pending Circus Circus sale, the MGM is expecting to receive gross proceeds of approximately $5 billion and estimated net cash proceeds (including expected transaction costs) of $4.3 billion, the release said.
Steve Wynn opened the Bellagio on Oct. 15, 1998. It became an MGM property in 2000 when MGM Grand, Inc., merged with Mirage resorts to create MGM Mirage. The company changed its name to MGM Resorts International in 2010.