Blackstone (NYSE:BX) is offering $6.2 billion for Crown Resorts. But that may not be enough…
Posted on: July 1, 2021, 10:10h.
Final up to date on: July 1, 2021, 12:02h.
Todd Shriber Learn Extra
MGM Resorts Worldwide (NYSE:MGM) is busy once more on the Las Vegas Strip. It introduced right this moment that it’s buying the 50 % of CityCenter it didn’t beforehand personal, and is promoting the property property of Aria and Vdara.
MGM’s Aria on the Vegas Strip, pictured above. The corporate is promoting that venue and Vdara to Blackstone. (Picture: YouTube)
The on line casino operator is paying $2.12 billion to Infinity World Improvement for the 50 % curiosity in CityCenter, valuing the complicated within the coronary heart of the Strip at $5.8 billion. That’s primarily based on web debt of $1.5 billion when accounting for a just lately bought two-acre piece of land for $80 million.
When that transaction wraps up — in what some actual property market consultants are calling a surprising transfer — the gaming firm will promote the property of Aria and Vdara to non-public fairness agency Blackstone (NYSE:BX) for $3.89 billion in money.
The Blackstone, Vdara and Aria new information is an entire shock,” mentioned James Harris, senior managing director at Helmsley Spear, in an interview.
He notes previous to the coronavirus pandemic, MGM CEO Invoice Hornbuckle expressed no real interest in promoting the 2 venues, “notably at what seems to be a discount worth.”
Aria, Vdara Value: Is It Proper?
Whereas knowledge confirms Las Vegas is recovering from the pandemic, some analysts could debate the pricing and timing of the Aria/Vdara divestment. Might’s gross gaming income (GGR) figures from the Nevada Gaming Management Board hit a document.
Although it’s making progress, the home gaming trade isn’t all the best way again from the worldwide well being disaster and up to date venue gross sales in Sin Metropolis haven’t fetched inspiring costs. In reality, some operators that had been broadly anticipated to promote Strip properties this yr seem like opting towards such strikes, maybe owing to still-depressed pricing on gaming actual property.
It is probably not an apples-to-apples comparability, however the $3.89 billion MGM is commanding for Aria and Vdara is lower than the $4.25 billion it bought Bellagio to Blackstone for in October 2019. It’s additionally effectively under the $4.6 billion the gaming firm hauled in when it parted with the property property of Mandalay Bay and MGM Grand in January 2020. Blackstone was a part of that transaction as effectively.
Nonetheless, the sale jibes with MGM’s long-standing asset-light technique, and with a distinction of greater than $1.7 billion between what it’s paying for half of CityCenter and what Aria and Vdara are being bought for, the on line casino large provides to what’s already one of many trade’s largest money stockpiles.
Blackstone: Howard Hughes of the Strip?
As for the non-public fairness firm, it’s cobbling collectively a formidable portfolio of glitzy Strip actual property.
“The query now’s this, What does Blackstone see in Las Vegas revenues future that it’s compiling a nook on the Strip Gaming market?,” Harris mentioned. “All they want is Wynn and they’ll rule Las Vegas as in the event that they had been a company Howard Hughes. What’s Blackstone’s end-game?”
After the Aria/Vdara transaction closes within the third quarter, Blackstone will personal the true property of these venues and Bellagio, together with its partial stakes in Mandalay Bay and MGM Grand, in addition to its outright possession of Cosmopolitan.
MGM is leasing again Aria and Vdara from Blackstone at an preliminary annual hire of $215 million. The $3.89 billion price ticket represents a a number of of 18.1x hire.
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