Blackstone Real Estate Income Trust, Inc., or BREIT, and VICI Properties Inc, currently the owner of a 50.1% interest in the joint venture that owns MGM Grand Las Vegas and Mandalay Bay Resort, announced today that they have entered the agreement allowing VICI to acquire BREIT’s 49.9% interest in the joint venture.
VICI Properties is a real estate investment trust that owns one of the largest portfolios of market-leading gaming, hospitality, and entertainment destinations, including Caesars Palace Las Vegas, MGM Grand, and the Venetian Resort Las Vegas, three of the most iconic entertainment facilities in the Las Vegas Strip.
Its partner to the latest agreement, BREIT, is a real estate investment platform externally managed by a subsidiary of Blackstone, a global leader in real estate investing. Blackstone’s real estate business was founded in 1991 and has approximately $319 billion in investor capital under management.
Scope of agreement:
The assignment agreement between VICI and BREIT is approximately worth $1.27 billion and anticipates VICI’s assumption of BREIT’s pro-rata share of the existing level of property debt. The BREIT’s debt has a principal balance of $3.0 billion and is due in 2032, with the annual interest rate fixed at 3.558% and payable through March 2030.
The properties from the scope of the agreement are located at the south end of the Las Vegas Strip in Las Vegas, Nevada. As they are subject to an existing lease agreement between the joint venture (that owns MGM Grand Las Vegas and Mandalay Bay Resort) and MGM Resorts International, the lease will generate annual rent of approximately $310 million from March 1, 2023, when the next rental period will start rolling out.
The scope of the agreement includes AAA Four Diamond Resorts, MGM Grand Las Vegas, and Mandalay Bay featuring over 18 million building square feet, around 11,000 guestrooms, and suites (including Four Seasons and Delano hotels) located on the Las Vegas Strip.
The properties also include around 321,000 square feet of gaming space with 191 table games and 2,235 slot machines and electronic table games, as well as huge state-of-the-art exhibition and meeting facilities, Michelin Star winning restaurants, MGM Grand Garden Arena (with approximately 17,000 seats), and many more amenities.
High conviction market:
Jon Gray, President and Chief Operating Officer of Blackstone, commented: “VICI Properties has been an outstanding partner on these assets and we are incredibly pleased to have delivered such exceptional returns for our BREIT investors. Las Vegas continues to be a high conviction market for Blackstone.”
Edward Pitoniak, Chief Executive Officer of VICI Properties, expressed content: “We have been honored to be BREIT’s partner in the MGM Grand Las Vegas / Mandalay Bay joint venture and this transaction further demonstrates the ability of Blackstone and VICI to work together productively, now and in the future.”
Pitoniak also said that he was excited to further VICI’s investment in MGM Grand Las Vegas and Mandalay Bay, two of the largest and highest-quality resorts. According to Pitoniak, VICI believes that these are the leisure and convention destinations ”with the most compelling future demand outlook.”
”This transaction also provides us with the opportunity to further grow our partnership with MGM Resorts International as they look to capitalize on the growing vitality of the South Strip,” concluded the CEO of VICI Properties.
The transaction awaits regular terms and conditions of closure with the parties expecting to have it completed in the first quarter of 2023.