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MGM Grand, Mandalay Bay Sold to Blackstone

By Ray Smith

Exhibit City News

MGM Grand and Mandalay Bay resorts are being sold to real estate investment company Blackstone Group for $4.6 billion in a joint venture lease-back transaction, The Wall Street Journal reported on Jan. 14.

The two massive Las Vegas resorts, which include the Mandalay Bay Convention Center and MGM Grand Conference Center, will be leased back to MGM Resorts International under a management agreement similar to Blackstone’s purchase of the Bellagio hotel and casino in October for $4.25 billion.

Mandalay Bay claims the fifth-largest convention center in the United States with 2.1 million square feet of meeting and exhibit space, while the 850,000-square-foot MGM Grand Conference Center can accommodate everything from intimate meetings to vast exhibitions.

Last year, MGM Resorts announced a 900,000-square-foot expansion of meeting and convention space at several of its Las Vegas properties, including the MGM Grand Conference Center and venues new to the market.

Las Vegas is recognized as one of the world’s premier meeting and convention destinations, and MGM Resorts plays a key role in the growth of the industry through major developments in its meeting and convention space. The Las Vegas-based gaming company now offers more than 4 million square feet of meeting facilities, which is more than all the meeting space in Manhattan combined.

MGM Resorts is also selling Circus Circus casino to real estate mogul Phil Ruffin for $825 million.

Chief Executive Officer Jim Murren said in October that he’ll use money from the MGM Grand sale to reduce debt and invest in new growth opportunities, including a potential $10 billion casino in Japan and sports betting in the United States.

The company’s transition should result in higher free cash flow per share and a more flexible financial structure that allows MGM to better capitalize on its strengths as a casino developer and manager, Murren said in a conference call.

MGM Resorts is continuing to evaluate the sale of its remaining real estate assets including CityCenter, a joint venture with Dubai World that owns the Aria resort in Las Vegas. The company also plans to reduce its majority stake in MGM Growth Properties, a real estate investment trust, Murren said.

MGM Growth Properties—a real estate investment trust largely owned by MGM Resorts—will own 50.1 percent of the joint venture, while Blackstone’s real estate trust will have a 49.9 percent stake, according to a news release. The Blackstone trust will also buy $150 million worth of shares in MGM Growth Properties. The deal is expected to close in the first quarter of this year.


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