MGM Resorts has announced the sale of its most iconic Las Vegas property, MGM Grand, and a sizeable stake in the real estate investment trust that holds Mandalay Bay in a massive US$4.6 billion transaction aimed at freeing up cash to further pursue its IR ambitions in Japan and in the growing US sports betting market.
In an overnight announcement, MGM revealed that ownership of both properties will be held by a new joint venture partnership between MGM Growth Properties LLC and Blackstone Real Estate Income Trust, including the acquisition of the MGM Grand real estate assets for US$2.5 billion. MGM Resorts, which will continue to run day-to-day operations at both properties at an annual cost of US$292 million, says it expects to receive net cash proceeds of approximately US$2.4 billion plus around US$85 million in MGM Growth Properties operating partnership units as part of the deal.
MGM Growth Properties will also pay US$1.4 billion for MGM Resorts’ existing operating partnership units and can redeem remaining units at any time over the next two years. The deal will see MGM Resorts’ ownership stake in MGM Growth Properties drop to around 55%.
Under the terms of the new joint venture between MGM Growth Properties and Blackstone Real Estate Income Trust, MGM Growth will own 50.1% with Blackstone holding the other 49.9%. The joint venture will subsequently acquire the real estate assets of Mandalay Bay from MGM Growth Properties which will be leased back to MGM Resorts as part of its annual US$292 million management deal.
This latest sale comes just months after MGM Resorts announced a similar transaction involving sale of the Bellagio, as well as selling Circus Circus Las Vegas, taking the total net cash raised by the company to around US$8.2 billion.
“Our corporate objective remains crystal clear,” said MGM Resorts Chairman and CEO Jim Murren. “We will continue to monetize our owned real estate assets, which facilitates our strong focus on returning capital to our shareholders, while also retaining significant flexibility to pursue our visible growth initiatives, including Japan and sports betting.”