Blackstone Real Estate Partners VII L.P., a real estate fund sponsored by Blackstone (NYSE: BX), has agreed to sell The Cosmopolitan of Las Vegas for $5.65 billion.
Blackstone Real Estate Income Trust Inc., an affiliated non-traded real estate investment trust, will acquire The Cosmopolitan’s real estate assets for a reported $4 billion, in partnership with Cherng Family Trust and Stonepeak Partners. MGM Resorts International will acquire the operations of hotel for $1.63 billion and sign a long-term net lease with the partnership.
The Wall Street Journal reported on Monday that the sale is Blackstone’s most profitable single property deal to date, reaping total profits of about $4.1 billion, including cash flow from operations at the property.
In 2014, Blackstone purchased the property for approximately $1.7 billion from Deutsche Bank, which built the property for $3.9 billion. Since the acquisition, Blackstone said that it has invested more than $500 million to renovate nearly 3,000 guest rooms, build 67 new rooms and suites, among other upgrades.
Blackstone also reached agreements with unions at the property and secured approximately 3,000 jobs for professionals that will continue to serve guests of the hotel.
“This transaction underscores Blackstone’s ability to acquire and transform large, complex assets. As owners of The Cosmopolitan, we invested strategic capital and brought our expertise and experience in the lodging space to create the most dynamic destination on the Las Vegas Strip,” said Tyler Henritze, head of acquisitions Americas for Blackstone Real Estate.
The transaction is expected to close in early 2022.
Blackstone Real Estate Income Trust’s initial offering launched in August 2016 and has raised $33.5 billion in three public offerings as of July 2021. The REIT has raised $9.4 billion in the current offering, as of mid-September. As of August 31, 2021, the REIT’s aggregate NAV was $38.3 billion.