MGM Resorts to Sell Two Major Las Vegas Casino Properties
While there are casinos located around the world, with several in the United States, some names and brands just stick out above the rest. MGM Resorts International is a major gambling company with properties around the world, including in the US. They own several well-known facilities including the Circus Circus Casino and the Bellagio of Las Vegas. Surprisingly, the company announced they are selling these two venues in separate deals in order to raise money to build a mega resort in Japan.
Months of Speculation
Several months have gone by with industry insiders discussing rumors that MGM was planning on selling the casinos. This week, the company confirmed that the Bellagio would be sold to The Blackstone Group, a financial services firm located in New York. The price tag for the building is a whopping $4.2 billion.
For Circus Circus, the Las Vegas venue will go to Phil Ruffin, the owner of the Treasure Island casino. The billionaire businessman will pay $825 million for the property.
With the Bellagio sale, MGM has entered into a joint venture with Blackstone Real Estate Income Trust where they will maintain a 5% equity interest. The joint venture will then be the owner of the Bellagio and it will be leased back to the subsidiary off the operator for $245 million in annual rent.
The Bellagio takes up more than 77 acres in Las Vegas and offers a sizeable 155,000 square foot casino. Close to 4,000 hotel rooms are located on-site along with dining and a host of amenities. The property has been a staple on the Las Vegas Strip for years and is one that is visited by tourists year after year.
A few months ago, it was reported that MGM was looking to offload the Bellagio and the MGM Grand to be able to extract value from their portfolio of assets in real estate. It was last month that it was reported that the casino operator was in the advanced stages of selling the property to Blackstone and leasing it back.
Blackstone has been quite busy obtaining gambling assets over the past few years. The company purchased The Cosmopolitan of Las Vegas and they are seemingly looking to see it now. They also own Cirsa of Spain.
Circus Circus History
The Circus Circus property was first opened in 1968 and has maintained a strong presence in Las Vegas for decades. The property was bought by MGM in 2005 when they acquired the Mandalay Resort Group. Ruffin of Treasure Island showed interest in purchasing a new property several months ago and will now pay $662.5 million in cash and a $162.5 million note due by 2024 for the facility.
It is expected that this deal will close in the fourth quarter of 2019 subject to closing conditions. To complete the deal, the two parties must be approved by gaming regulators.
Gross proceeds of close to $5 billion should be received by MGM Resorts International with the close of the two deals.