Blackstone Real Estate Partners said it's selling The Cosmopolitan of Las Vegas for $5.65 billion, and MGM Resorts International will take over operations of the casino resort in a $1.625 billion deal.
The new owners are a partnership among single-family office organization Cherng Family Trust, alternative investing firm Stonepeak Partners and Blackstone Real Estate Investment Trust, according to a news release. The deal is expected to close in early 2022.
“Stonepeak, in partnership with the Cherng Family Trust, believes this transaction represents a fantastic opportunity to invest in the underlying real estate of The Cosmopolitan of Las Vegas, a solid asset with an irreplaceable location, durable cash flows and the potential for additional upside,” said Phill Solomond, head of real estate at Stonepeak, in the statement.
Tyler Henritze, Blackstone Real Estate’s head of acquisitions for America, said the deal underscores the company’s ability to acquire and transform large, complex assets. Blackstone acquired the property in 2014 and invested more than $500 million to renovate almost 3,000 guestrooms, add 67 new rooms and suites, enhance its food and beverage offerings as well as improve the casino’s gaming amenities.
“As owners of The Cosmopolitan, we invested strategic capital and brought our expertise and experience in the lodging space to create the most dynamic destination on the Las Vegas Strip,” he said.
The Cosmopolitan has 3,032 rooms and suites along with a 110,000 square-foot casino with a high-end gaming area and 26 food and beverage outlets. For entertainment and recreation, there is a 3,200 square-foot theater, both a marquee nightclub and dayclub, 21,000 square feet of leased retail space and a 40,000-square-foot spa and fitness facility. The property also includes 243,000 square feet of meeting space for large and small groups.
In considering options for the property ahead of the sale, Blackstone Real Estate executives decided separating the operations from the real estate would result in “an optimal outcome,” according to the statement.
In a separate news release, MGM Resorts said it will enter into a 30-year lease agreement with three 10-year renewal options to operate The Cosmopolitan. It will pay an initial annual rent of $200 million, growing at 2% annually for the first 15 years and then the greater of 2% or the consumer price index increase, capped at 3%.
"The Cosmopolitan brand is recognized around the world for its unique customer base and high-quality product and experiences, making it an ideal fit with our portfolio and furthering our vision to be the world's premier gaming entertainment company," MGM Resorts President and CEO Bill Hornbuckle said in the release.