On Wednesday, a $ 17 billion deal was announced that merged many of Las Vegas’s largest casino hotels into one real estate company.
As part of one of the largest real estate deals on the Las Vegas Strip, Vici Properties (a subsidiary of Caesars Entertainment) has entered into a deal to acquire MGM Growth Properties (a subsidiary of MGM Resorts International in real estate). The $ 17.2 billion deal is expected to close in the first half of 2022, and upon completion, many of the largest and most recognizable properties in the Strip will move to the same title.
MGM Growth Las Vegas real estate includes MGM Grand (50.1% ownership), Mirage, Mandalay Bay (50.1% ownership), Park MGM, New York-New York, Excalibur and Luxor. Vici’s current portfolio of properties in Nevada includes Caesars Palace, Harrah’s Las Vegas and Harrah’s Laughlin.
MGM Growth properties outside Nevada include Borgata in Atlantic City, New Jersey; MGM Grand Detroit; MGM National Harbor in Prince George County, Maryland; and the Beau Rivage and Gold Strike Tunica in Mississippi.
Vici Properties CEO Ed Pitognac said the deal will create “America’s best gaming, entertainment and leisure REIT” during a conference call, announcing a deal that will make Vici the largest privately owned meeting and conference facility in the country and the largest hotel owner. in the USA by the number of rooms.
The agreement includes an initial 25-year lease with MGM Resorts International, which will continue to operate the casino hotels previously owned by MGM Growth Properties.
MGM Resorts, which spun off from MGM Growth Properties in 2016 as the owner of most of the company’s real estate, expects to receive approximately $ 4.4 billion in cash from the deal and will own a 1% stake in Vici, worth approximately $ 370 million.
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The move is another major step in MGM Resorts’ light asset strategy of selling real estate under leases to continue operating the hotels.
MGM Resorts CEO Bill Hornbuckle said the deal was “a major step forward in simplifying our corporate structure” and marked the culmination of their efforts to “reduce asset costs.”
In early July MGM Resorts announced sale of hotels Aria and Vdara The Blackstone Group and a related leaseback deal to keep MGM running the hotels. In January 2020, Blackstone struck a $ 4.6 billion deal with MGM Growth Properties to purchase real estate MGM Grand and Mandalay Bay and rent the property back to MGM Resorts. Blackstone acquired 95% of Bellagio in 2019 for approximately $ 4.2 billion and similarly signed a leaseback agreement with MGM.