A joint venture between Blackstone Real Estate Income Trust Inc., a publicly registered non-traded REIT sponsored by private equity giant The Blackstone Group (NYSE: BX), and publicly traded REIT, MGM Growth Properties LLC (NYSE: MGP), have agreed to purchase the Las Vegas real estate assets of the MGM Grand and Mandalay Bay for $4.6 billion. In addition, Blackstone REIT will purchase $150 million in MGM Growth Properties Class A shares.
The transaction is expected to close in the first quarter of 2020, and MGM Growth Properties will own 50.1 percent of the joint venture, while Blackstone REIT will own 49.9 percent.
At closing, MGM Resorts International (NYSE: MGM) will enter into a long-term triple net master lease for both properties and provide a full corporate guarantee of rent payments.
MGM Resorts will continue to manage, operate and be responsible for all aspects of the properties on a day-to-day basis, with the joint venture owning the properties and receiving rent payments.
In November 2019, Blackstone REIT purchased the real estate assets of The Bellagio Las Vegas for $4.25 billion in a sale-leaseback transaction and joint venture with MGM Resorts.
“Similar to the Bellagio, owning these two premier Las Vegas assets under a long-term lease with MGM provides stable cash flow and excellent downside protection for our BREIT investors,” said Tyler Henritze, head of U.S. acquisitions for Blackstone Real Estate.
Together, the MGM Grand and Mandalay Bay comprise 9,743 rooms, approximately three million square feet of meeting space, and approximately 300,000 square feet of casino space across 226 acres on the Las Vegas Strip.
MGM Resorts’ initial annual rent will be $292 million. MGM Growth Properties currently owns the Mandalay Bay real estate, and MGM Resorts currently owns the MGM Grand real estate.
MGM Growth Properties focuses on the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts and currently owns a portfolio of 11 resorts in Las Vegas and elsewhere.
Blackstone Real Estate Income Trust is a perpetual life, monthly NAV REIT that invests in stabilized income-oriented commercial real estate in the United States and real estate-related securities. The company is headquartered in New York City and externally managed by BX REIT Advisors, a subsidiary of Blackstone.
Blackstone Real Estate Income Trust originally registered $5 billion in shares and accepted gross offering proceeds of $4.9 billion from January 1, 2017 to January 1, 2019. The company later registered a $12 billion follow-on offering, and as of January 8, 2020, had received $5.7 billion in investor proceeds.
As of November 30 2019, the REIT owned a $28.5 billion property portfolio and had positions in real estate-related securities and loans totaling $4.2 billion. The company currently invests in multifamily, industrial, hotel, and retail properties, and real estate-related securities and loans.