MGM to Expand Las Vegas Resort Footprint with Operations Acquisition of The Cosmopolitan

September 28, 2021
TSNN News

MGM Resorts International has entered into a definitive agreement with New York-based private equity behemoth Blackstone Group to acquire the casino and hotel operating rights of The Cosmopolitan of Las Vegas for just over $1.6 billion. 

Announced Sept. 27, the deal coincides with Blackstone’s sale of the 3,032-room Strip resort to a group of buyers for about $5.6 billion, nearly tripling its investment in the Strip property seven years after acquiring it from Deutsche Bank for just over $1.7 billion and spending $500 million on capital improvements.

According to Blackstone officials, a consortium comprising the Cherng Family Trust, Stonepeak Partners and Blackstone Real Estate Income Trust (BREIT) will pay approximately $4 billion to acquire the property’s real estate assets.

Following the transaction’s expected close in the first half of 2022, MGM Resorts will enter into a 30-year lease agreement with the group of buyers, including three 10-year renewal options, under which it 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 consumer price index increase (capped at 3%) after that.

Upon the sale’s completion, The Cosmopolitan will grow MGM’s massive footprint along the Strip, becoming its 14th Las Vegas casino resort alongside iconic properties including Mandalay Bay Resort and Casino; Bellagio; MGM Grand; ARIA Resort & Casino; Delano Las Vegas; Vdara Hotel & Spa; Luxor; Excalibur; New York-New York; The Signature at MGM Grand; NoMad Las Vegas; The Mirage and Park MGM.

“We are proud to add The Cosmopolitan, a luxury resort and casino on the Las Vegas Strip, to our portfolio,” said Bill Hornbuckle, president and CEO of MGM Resorts in a statement. “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.” 

Opened in December 2010 at a price tag of about $4 billion, The Cosmopolitan features 3,032 rooms and suites that were renovated in December 2018, a 110,000-square-foot casino with high-end gaming areas; a 3,200-seat theater; Marquee nightclub and dayclub; 243,000 square feet of meeting space; 21,000 square feet of leased retail space; a 40,000-square-foot spa and fitness center; 26 food and beverage offerings, and a fourth-floor swimming pool overlooking Las Vegas Boulevard. 

MGM Resorts CFO Jonathan Halkyard said he believes owning the operating rights of The Cosmopolitan offers the company an incredible opportunity to expand its customer base while providing a greater depth of choices for leisure and business visitors in Las Vegas.

“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,” Halkyard said. 

While The Cosmopolitan was closed from mid-March to early June 2020 along with all other Nevada casinos due to the coronavirus pandemic, in the second quarter of 2021 the property generated $234 million in net revenue and $92 million in adjusted EBITDAR (earnings before interest, taxes, depreciation, amortization and rent costs).

 

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MGM Resorts: HERE, Good Company Leads to Great Companies
HERE, hosting responsible meetings and caring for our communities are top priorities. 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 an impact in the lives of employees, guests, and the communities in which it operates. Water Stewardship Efforts MGM Resorts understands the importance of using water efficiently, especially in the desert destination of Las Vegas. Conserving water has always been part of the mission, but MGM Resorts has expanded its ambition into water stewardship. In 2022, MGM Resorts President and CEO Bill Hornbuckle signed the CEO Water Mandate—a UN Global Compact initiative mobilizing business leaders to advance water stewardship. MGM Resorts International was the first gaming company to take this important step. MGM Resorts replaced 200,000 square feet of real grass with drought-tolerant landscaping in Las Vegas. MGM Resorts pledges to reduce water withdrawal intensity by 33% by 2025 and by 35% by 2030. From 2007-2021, use of more than 5.6 billion gallons of water was avoided because of conservation efforts. Caring for One Another MGM Resorts’ Food Donations Program collects and preserves unserved food from conventions held at MGM Resorts properties, then safely donates to food insecure people in the community. Since the program’s launch in 2016, more than 3.7 million meals toward a 2025 goal of 5 million meals have been donated into the community. Donations include: Unserved perishable prepared foods from events Perishable unprepared food from MGM Resorts’ kitchens Nonperishable food items from minibars and warehouses The collaboration with Southern Nevada’s primary food bank, Three Square, has developed the infrastructure needed to safely collect, transport, and store food from MGM Resorts properties in Las Vegas, reducing food waste while serving the community. Fostering Diversity and Inclusion To MGM Resorts, a diverse and talented workforce is essential to success. By cultivating innovative strategies that consider multiple perspectives and viewpoints, the company creates an inclusive workplace culture that benefits its employees and community. MGM Resorts takes pride in being a welcoming home for veterans, individuals with disabilities, people from diverse backgrounds, LGBTQ+ community members, and more. This commitment to inclusion is reflected in the company's recruitment and hiring practices and its social responsibility initiatives. From the workplace to the community, MGM Resorts' commitment to diversity, equity and inclusion remains unwavering, and its efforts continue to create a more equitable and sustainable world for all. MGM Resorts understands its responsibility to contribute to the social and economic progress of the communities in which it operates. HERE, we embrace humanity.
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