VICI Adds Two Las Vegas Casino Properties in $5.5bn Deal

Nathan Bennett
Nathan Bennett
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MGM Grand Las Vegas

In one of many greatest on line casino offers of 2022, VICI Properties has taken full possession of MGM Grand Las Vegas and Mandalay Bay in a transaction valued at $5.5bn. [Image:]

Monster on line casino deal

In what the Wall Road Journal has deemed one of many greatest US on line casino offers of 2022, personal fairness big Blackstone is promoting its 49.9% stake in MGM Grand Las Vegas and Mandalay Bay to New York Metropolis-based Actual Property Funding Belief (REIT) VICI Properties.

greatest landlord on the Las Vegas Strip

The WSJ revealed the deal valued at $5.5bn on Thursday, strengthening the REIT’s place as the largest landlord on the Las Vegas Strip by a substantial margin. Blackstone’s shares nosedived virtually 10% on the information, prompting author-entrepreneur Gerald Peters to share the buying and selling alternative by way of Twitter:

The transaction sees VICI — which already owned a 50.1% stake in MGM Grand and Mandalay Bay — pay Blackstone $1.27bn in money and assume the agency’s share of some $3bn in debt “at a 3.56% fee by way of 2032,” stories CNBC.

Showing on CNBC’s Energy Lunch, VICI CEO Ed Pitoniak labeled the three.56% deal one contemplating the REIT might need anticipated to pay 6%.

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Advantages for each

Pitoniak used the Energy Lunch platform to disclose the pace at which the deal, anticipated to shut within the first quarter of 2023, got here collectively after Blackstone approached him “only a couple weeks in the past.”

“We have been very excited concerning the alternative. Clearly it simplifies our construction, but it surely offers us complete possession of two of probably the most iconic belongings on the Las Vegas Strip the MGM Grand and Mandalay Bay,” Pitoniak stated.

VICI’s portfolio contains the Harrah’s, Bally’s and Horseshoe manufacturers, together with 4 championship golf programs. In February, the REIT accomplished the high-profile $6.25bn buy of all of Las Vegas Sands remaining Sin Metropolis properties. The addition of Mandalay Bay and MGM Grand offers the REIT outright possession of a further 226 prime-located acres on the Strip.

Whereas the transaction reinforces VICI’s S&P 500 presence, it offers Blackstone each short-term features and buffers. Within the former class, the WSJ cites sources aware of the deal who declare the sale ought to earn Blackstone a revenue of over $700m in lower than three years, together with hire from the operator. As well as, the vendor said it will probably use the proceeds to buy higher-return belongings, similar to industrial and rental properties.

Blackstone shareholders spooked

One more reason for the deal from Blackstone’s facet is the necessity for a monetary buffer to permit investor withdrawals.

a hike in withdrawals in October and November

The corporate noticed a hike in withdrawals in October and November from Blackstone’s actual property fund, Breit. The fund is promoting the stake within the two Vegas casinos, with proceeds going to assist Breit meet these requests. 

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On Thursday, Breit posted a discover to shareholders on its web site to tell buyers it will permit them to withdraw solely 0.3% the fund’s web belongings in December, after exceeding its month-to-month restrict of two% by 2.7%, or round $1.8bn, in October. The withdrawal cap baulked Blackstone shareholders, therefore the ten% fall in share worth Thursday as buyers rushed to exit following information of the VICI deal.

Blackstone nonetheless owns the bodily belongings of the Cosmopolitan and the Bellagio. Firm COO Jay Grey confirmed that regardless of the VICI sale it nonetheless sees Vegas as “a excessive conviction market.”

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