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MGM offloads Vegas’ Bellagio

Tue, Nov 19, 12:01pm by Noah Taylor

One of Las Vegas’ most glamorous resorts has been sold.

The Star Advertiser is reporting that The Bellagio was sold for $4.2 billion to Blackstone Group, the owners of the Cosmopolitan of Las Vegas.

The seller, MGM Resorts International, will retain a five per cent ownership stake and continue to operate the hotel and casino for Blackstone, meaning that nothing much will change in the short term.

The $4.2 billion price tag implies Blackstone is paying 17.3 times the annual rent of $245 million.

“This transaction confirms the premium value of our owned real estate assets, highlights the unique value of Bellagio as a premier asset in gaming and solidifies our status as a premier operator of gaming and entertainment properties,” MGM chief executive officer Jim Mruren said in a statement.

The deal is expected to close in the current quarter.

In the statement, MGM noted that the sale of Circus Circus, located at the north end of the Strip is “pending” and that divesting that property and Bellagio would result in gross proceeds of $5 billion and after-tax cash of $4.3 billion for the company.

Earlier this year, analysts forecast that on a pre-tax basis, Sales of Bellagio and MGM Grand could command $6 billion to $7 billion, indicating the latter could fetch up to $2.8 billion should that venue be sold.

After unloading Circus Circus and the Bellagio, MGM is seeking buyers to take on Mandalay Bay and MGM Grand.

Bloomberg’s real estate reporter Gillian Tan says sources close to the negotiations explain MGM has sent feelers out to known gaming industry investors to gauge interest.

MGM Resorts and its REIT MGM Growth Properties are soliciting offers.

MGP owns six MGM Strip casinos – Mandalay Bay, Mirage, Park MGM, Luxor, New York-New York and Excalibur.

MGM Resorts formed REIT in 2016 and solid a minority interest to the public through an initial public offering.

MGP owns the physical assets, but it leases its casino and hotel operations back to MGM.

Mandalay Bay has 4,752 guest rooms and a 155,000-square-foot casino floor.

With more than 6,800 hotel rooms, MGM Grand is the largest single hotel in the United States with the casino floor measuring 171,000 square feet.

Yokohama to throw its hat into Japanese casino ring

Yokohama will join the race for the right to host one of Japan’s first casino resorts according to government sources.

Casino News Daily reported in September that the country’s government has authorised the development of up to three integrated resorts that are expected to open in the mid-2020s.

Other Japanese cities and prefectures have already ramped up their efforts to race for the right to host one of the resorts.

Osaka has a plan for a resort on the artificial Yumeshima island and is considered by many as the frontrunner in the race.

The man-made island was selected, as the site for the 2025 World Expo last year, which is believed will further boost its casino bid.

As Osaka launches its selection process, expect extraordinary competition among at least a half-dozen of the biggest names in gaming, and in this beauty contest, second place won’t even get a bouquet.

“For a successful development, you need a number of things to align: a sufficient population base, including tourists, to feed customers, infrastructure and political support,” MGM Japan CEO Ed Bowers says.

“Osaka has consistently said it wanted integrated resorts. In all jurisdictions across the world, if you don’t get political support, it is extremely difficult for IR development to be successful,” he said.

In January, MGM declared as “Osaka First” strategy and in March, confirmed a partnership with Japanese financial services giant Orix.


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