Blackstone Group completed the $4 billion sale of the 3,027-room Cosmopolitan hotel in Las Vegas from one of its funds to another, in what appears to be the largest single-property deal in the city’s history as the U.S. gambling capital's recovery from the pandemic accelerates.

Private equity giant Blackstone has managed to take a profit on the property — a feat the original owner of the 12-year-old property did not accomplish. At the same time, Blackstone retains control of the luxury hotel as Las Vegas is once again a desired destination for business and travelers.

The deal comes as the Las Vegas hotel market is showing signs of resiliency and is poised for a strong recovery fueled by pent-up demand and limited international options, analysts say. Earlier this month, Fitch Ratings affirmed its AA- rating on Las Vegas’ general obligation bonds and revised its rating outlook for the city to positive from stable.

“Revenue growth is expected to be solid over the long term, supported by population growth and expected recovery in the travel and leisure sector,” Fitch said. “The revision of the outlook to positive from stable reflects the city’s accelerated recovery evidenced through favorable visitor trends and improved revenue growth prospects that are expected to continue for the foreseeable future.”

The sale of the property included two transactions, with the first leg closing May 17. MGM Resorts acquired the operations of the Cosmopolitan from a fund controlled by Blackstone for $1.6 billion in cash. With the closing of that transaction, the Cosmopolitan officially joins MGM Resorts’ roster of iconic brands along the Las Vegas Strip.

The second part of the deal had Blackstone Real Estate Income Trust participating in a partnership alongside third-party investors Cherng Family Trust and Stonepeak Partners in the acquisition of the real estate assets of the Cosmopolitan from Blackstone Real Estate Partners for $4 billion, in what would be the largest single-property deal ever in Las Vegas, according to CoStar data. Blackstone REIT acquired the majority interest.

Blackstone Real Estate Partners had acquired the property in 2014 for $1.73 billion from Deutsche Bank, which had taken title to the property through foreclosure. The former owner, 3700 Associates LLC, defaulted on a $760 million construction loan from Deutsche Bank in January 2008 during the Great Recession.

Media reports have pegged the development cost of the Cosmopolitan as high as $4 billion. Blackstone declined to comment on the sale. However, the company discussed its ownership of the Cosmopolitan in a video posted on its website.

“The Cosmopolitan was a classic buy it, fix it, sell it opportunity,” company officials said on the video. “It had been foreclosed upon by the banks. As a result of the size and complexity of the situation, we were able to buy this asset at less than half of replacement costs. We came with capital, with our know-how, our experience and we brought that to bear on the property.”

Blackstone reworked the gambling and hotel mix and put in place operational efficiencies. Developer 3700 Associates had left the top four floors of the east tower unfinished. Blackstone completed that work, adding 21 penthouse suites. It also redesigned over 3,000 guest rooms.

While no documents disclosing the latest transfer of the property showed up in an online property search with the Clark County, Nevada, recorder’s office, MGM Resorts said the real estate sale closed and that it signed a lease with the new owners.

“This is a big moment for our company and for the Las Vegas Strip. The Cosmopolitan of Las Vegas has already established itself as one of the Strip’s premier resorts with an iconic brand, well-curated experiences and a loyal customer base,” MGM Resorts CEO Bill Hornbuckle said in a statement.

MGM Resorts said it entered into a 30-year lease agreement, with three 10-year renewal options, with the new partnership including Blackstone REIT, which it said completed the acquisition of the real estate. MGM Resorts will pay an initial annual rent of $200 million, escalating annually at 2% for the first 15 years and the greater of 2% or the annual consumer price index increase, capped at 3%, thereafter.

In the trailing 12 months ending March 31, the Cosmopolitan generated $1.1 billion of net revenue and $416 million of adjusted earnings before interest, taxes, depreciation, amortization and restructuring or rent costs, according to MGM Resorts.

The results are a rebound from the economic strains of the pandemic. For most of 2020, net cash flow was down 67.3% compared to pre-pandemic levels from 2019, according to analysis by DBRS Morningstar, which tracked a previous deal on the commercial mortgage-backed securities market financing the property.

The pandemic still introduces uncertainty surrounding the timing and strength of the city’s recovery, Fitch added.

Nonetheless, real estate developers are taking their chances on Las Vegas. Oak View Group recently bought land with plans to build a $3 billion entertainment district with two arenas, a casino and a hotel. Oak View CEO Tim Leiweke told CNBC that the main arena at the planned complex is being designed with the possibility of landing an NBA team.

Citigroup is preparing a new CMBS offering for financing on the real estate portion of the Cosmopolitan deal.

Financing is coming from a bevy of lenders with Citi Real Estate Funding taking the lead. Other lenders include Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley, according to a filing with the Securities and Exchange Commission. Details of the loan were not disclosed.