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The Cosmopolitan could be up for sale

Mon, Apr 22, 1:07pm by Staff Writer

The owners of The Cosmopolitan in Las Vegas has retained two investment banks to explore the sale of the 3,000-room resort on the famous Las Vegas Strip.

The Review Journal is reporting that The Blackstone Group, a major player in Southern Nevada real estate, has retained Deutsche Bank AG and PJT Partners Inc. to explore strategic alternatives for the property, including a sale.

Analyst with Macquarie Research Chad Beynon told the Review Journal that The Cosmopolitan could sell for as high as 13 times its cash flow – which is more than $300 million – implying a price tag of $4 billion.

The property would be the first major operating casino on the Strip to go on the market in more than a decade.

Representatives of Blackstone and Wynn Resorts – identified as suitors for the property – both declined to comment on the reports.

MGM International was also identified as a potential buyer because the property lies between two MGM developments, Bellagio and CityCenter.

A spokesman for MGM Resorts couldn’t be reached for comment.

An expert of Las Vegas real estate John Knott said there’s not a broad list of companies that could quality for such a purchase.

“You have to have the financial qualifications to perform before they even let you enter the process,” Knott said.

“There probably will be a lot of wannabees that reach out to them that could create some noise. But there are others that want to be on the Strip, like Penn National or Boyd, and MGM could have a strategic interest in it because it’s between their properties,” he said.

John DeCree, an analyst at Las Vegas-based Union Gaming said MGM Resorts, Wynn Resorts and Penn National could be potential buyers.

A spokesman for Penn National could not be reached for comment and Boyd Gaming declined to comment.

MGM could team up with MGP, its real estate investment trust, while Penn could partner with Gaming and Leisure Properties, its REIT partner, to buy the property, DeCree said.

The Cosmopolitan sits between MGM Resorts’ luxury Bellagio and Aria properties, so it makes sense that MGM would look at it, Beynon said.

MGM has promised investors it would like to reduce leverage in the coming years.

It could sell a property like The Mirage or Mandalay Bay to help finance the purchase of The Cosmopolitan, Beynon said.

Another potential buyer with the financial wherewithal could be the Genting Group of Malaysia, which is building Resorts World Las Vegas about a mile north of the Strip.

MGM eager to expand

MGM and rivals Wynn Resorts and Las Vegas Sands have long had a presence in Japan and will be jockeying for one of the first three licenses to be granted.

Hard Rock International announced an elaborate plan for a casino resort in the city of Tomakomai in January.

In a January 11 press release, Hard Rock detailed their plans that include monorail access to the airport, a guitar-shaped hotel tower, an additional Four Seasons hotel, an entertainment venue, theatres, a health and wellbeing centre and more than 215,000 square feet of retail and dining space.

There will be a focus on an authentic Ainu village experience, with the Ainu people being a local indigenous population.

Hard Rock has also announced a number of key partnerships with prominent global brands.

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