MGM Resorts International announced that the Company has entered into a definitive agreement with Blackstone to acquire the operations of The Cosmopolitan of Las Vegas (the “property” or “The Cosmopolitan”) for cash consideration of $1.625 billion, subject to customary working capital adjustments.
The purchase price represents a multiple of approximately eight times adjusted EBITDA, inclusive of expected operational synergies and identified revenue growth opportunities.
Following the close of the transaction, MGM Resorts will enter into a 30-year lease agreement, with three 10-year renewal options, with a partnership among Stonepeak Partners, Cherng Family Trust and Blackstone Real Estate Income Trust, Inc. (“BREIT”), which will acquire The Cosmopolitan’s real estate assets. MGM Resorts will pay an initial annual rent of $200 million, escalating annually at 2% for the first 15 years and the greater of 2% or the CPI increase (capped at 3%) thereafter.
“We are proud to add The Cosmopolitan, a luxury resort and casino on the Las Vegas Strip, to our portfolio,” said MGM Resorts CEO & President Bill Hornbuckle (pictured left). “The Cosmopolitan brand is recognized around the world for its unique customer base and high-quality product and experiences, making it an ideal fit with our portfolio and furthering our vision to be the world’s premier gaming entertainment company. We look forward to welcoming The Cosmopolitan’s guests and employees to the MGM Resorts family.”
“With over $500 million of capital invested to upgrade the property since 2014, The Cosmopolitan offers an incredible opportunity to expand our customer base and will provide greater depth of choices for our guests in Las Vegas,” said MGM Resorts CFO Jonathan Halkyard. “We believe that we can leverage MGM Resorts’ expertise, operating platform and other highly achievable synergies to continue providing best-in-class service, while driving growth for the property.”
Prior to the COVID-19 pandemic in the trailing 12 months ended February 29, 2020, The Cosmopolitan generated $959 million of net revenue and $316 million of adjusted EBITDAR1. In the second quarter ended June 30, 2021, the property generated $234 million of net revenue and $92 million of adjusted EBITDAR1.
The Cosmopolitan, a world-class contemporary luxury resort and casino, opened in December of 2010 and underwent significant capital improvements since Blackstone acquired the property in 2014. The property features:
- 3,032 rooms and suites that were renovated in December of 2018, most of which feature a terrace that overlooks the iconic Las Vegas Strip,
- a 110,000 square-foot casino, with high-end gaming areas for VIP guests,
- 26 on-trend food and beverage offerings, with 19 new concepts introduced in the last four years,
- a 3,200 seat theater (The Chelsea),
- Marquee nightclub and dayclub that hosts top DJs from around the world,
- 243,000 square feet of centrally located meeting space, featuring state-of-the-art technology to accommodate both large and small groups,
- 21,000 square feet of leased retail space, and
- a 40,000 square foot spa and fitness facility.
The transaction is expected to close in the first half of 2022, subject to regulatory approvals and other customary closing conditions.
1 Calculated as EBITDA before rent, impairment loss and pre-opening expenses, and after corporate expenses.
MGM Resorts International (NYSE: MGM) is an S&P 500® global entertainment company with national and international locations featuring best-in-class hotels and casinos, state-of-the-art meetings and conference spaces, incredible live and theatrical entertainment experiences, and an extensive array of restaurant, nightlife and retail offerings. MGM Resorts creates immersive, iconic experiences through its suite of Las Vegas-inspired brands. The MGM Resorts portfolio encompasses 31 unique hotel and destination gaming offerings in the United States and Macau, including some of the most recognizable resort brands in the industry such as Bellagio, MGM Grand, ARIA and Park MGM. The Company’s 50/50 venture, BetMGM, LLC, offers U.S. sports betting and online gaming through market-leading brands, including BetMGM and partypoker. The Company is currently pursuing targeted expansion in Asia through the integrated resort opportunity in Japan. Through its “Focused on What Matters: Embracing Humanity and Protecting the Planet” philosophy, MGM Resorts commits to creating a more sustainable future, while striving to make a bigger difference in the lives of its employees, guests, and in the communities where it operates. The global employees of MGM Resorts are proud of their company for being recognized as one of FORTUNE® Magazine’s World’s Most Admired Companies®. For more info, visit www.mgmresorts.com.