LAS VEGAS (KLAS) — Just moments after it announced the sale of Circus Circus, MGM Resorts International says it has entered into a leaseback partnership with Blackstone for the Bellagio.
The property is valued at $4.25 billion in what they’re calling a “landmark transaction for the gaming and entertainment industry.”
Blackstone Real Estate Income Trust acquired the Bellagio and will lease it to a subsidiary of MGM Resorts for an initial annual rent of $245 million. The agreement grants MGM Resorts a 5% equity interest in the joint venture and $4.2 billion in cash.
As with the Circus Circus property, this transaction is part of MGM Resort’s plan to lower the amount of capital assets it has, return capital to its shareholders, to operate on a more efficient basis and ultimately expand.
“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.,” said Jim Murren, chairman and CEO of MGM Resorts.
Blackstone President Jon Gray expressed the company’s excitement to partner with MGM Resorts and acquire the Bellagio on behalf of its BREIT investors.
MGM Resorts has noted it is steering away from being a capital-heavy company reliant on brick and mortar real estate and working toward becoming a “developer, manager and operator of leading gaming hospitality and entertainment properties.”
The transaction is expected to close in the fourth quarter of 2019.