Large Las Vegas property proprietor to take full possession of two casinos

The biggest property proprietor on the Las Vegas Strip is doubling down and taking full possession of the MGM Grand Las Vegas and Mandalay Bay, which the deal values at $5.5 billion.

VICI Properties, an actual property funding belief primarily based in New York, has agreed to purchase Blackstone’s 49.9% stake within the two Las Vegas on line casino resorts. VICI presently owns a 50.1% stake within the property, which it acquired when it purchased MGM Progress properties in Could.

The transaction is predicted to shut in early 2023.

Showing on CNBC’s Energy Lunch, VICI Properties CEO Ed Pitoniak mentioned Blackstone approached him only a couple weeks in the past, and that the deal got here collectively rapidly.

“We had been very excited concerning the alternative. Clearly it simplifies our construction, however it offers us complete possession of two of essentially the most iconic property on the Las Vegas strip the MGM Grand and Mandalay Bay,” Pitoniak mentioned.

Blackstone Actual Property Funding Belief, referred to as BREIT, mentioned Thursday that it determined to restrict withdrawals after it noticed redemptions in October that exceed their month-to-month limits. Blackstone shares dropped nearly 10% on the information.

However what was an issue for Blackstone could also be a chunk of fine luck for VICI.

“We just like the deal because it simplifies VICI’s construction and highlights VICI’s a number of paths for progress regardless of the corporate’s bigger base and a rising rate of interest setting,” Truist analyst Barry Jonas wrote in a shopper notice.

Gaming REITS corresponding to VICI personal the buildings and the land of casinos and resorts. Playing corporations, corresponding to Caesars and MGM Resorts − each tenants of VICI − personal the operations.

MGM Grand Las Vegas and Mandalay Bay, situated on the south finish of the Strip, embody greater than 11,000 resort rooms, 321,000 sq. toes of gaming flooring, and three million sq. toes of assembly services.

VICI is placing in additional than a $1 billion in money, and assuming greater than $3 billion of Blackstone debt at a 3.56% price by 2032. Pitoniak referred to as {that a} whole lot at a time when VICI might need anticipated to pay 6%.

VICI’s CEO says he is bullish on Las Vegas’s continued progress, pointing to a packed conference and leisure calendar subsequent 12 months, and attention-getting sports activities occasions together with F1 in November 2023.

Regardless of the sale, Blackstone COO Jay Grey mentioned Las Vegas continues to be a excessive conviction marketplace for Blackstone, which additionally owns the bodily property of the Cosmopolitan and Bellagio.

Many analysts and buyers are additionally bullish on the alternatives for progress in Las Vegas.

October marked the twentieth straight month of $1 billion or extra in state gaming income, in line with figures launched by the Nevada Gaming Management Board.

Strip casinos are seeing a 20% surge in income by October to $6.8 billion in gaming income from a 12 months in the past.

Las Vegas can be attracting a file variety of guests. Harry Reid Worldwide noticed greater than 5 million passengers for the primary time ever in October.

“It is additional proof that Las Vegas stays amongst essentially the most in-demand locations on this planet,” mentioned Rosemary Vassiliadis, Clark County’s director of aviation.

And resort income in Las Vegas was up 51% in October in contrast with October 2019, earlier than the pandemic, in line with the Las Vegas Conference and Guests Authority.

Deutsche Financial institution, which has a “purchase” ranking on the inventory, raised its worth goal to $38 following information of the transaction.