MGM to Expand Las Vegas Resort Footprint with Operations Acquisition of The Cosmopolitan
September 28, 2021
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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Partner Voices
MGM Resorts is renowned for its exceptional service and diverse venue options across Las Vegas, Detroit, Springfield, National Harbor, Biloxi, and Atlantic City, providing flexible spaces for meetings of any size. Beyond these offerings, MGM Resorts distinguishes itself through a strong commitment to social responsibility and sustainability, making it an ideal choice for your next meeting.
At the core of MGM Resorts' company values is its platform, "Focused on What Matters," dedicated to meeting customer needs while advancing socially responsible practices. This commitment is evident in several key areas:
Protecting Natural Resources
MGM Resorts is home to industry-leading recycling, renewable electricity and water conservation programs. Some highlights include a cogeneration power plant at ARIA, producing ultra-efficient electricity; one of America’s largest contiguous rooftop solar arrays atop the convention center at Mandalay Bay; and onsite wells that provide water for the celebrated Fountains of Bellagio, avoiding reliance on precious Colorado River water. These efforts and many more save on natural resources while boosting attendee satisfaction.
Committed to Community
Always striving to be good neighbors, MGM Resorts works to avoid food waste and combat food insecurity with the Feeding Forward program. In partnership with local food banks, they safely divert unserved food to food insecure members of the community. Since 2016, over 5 million meals have been provided, highlighting MGM Resorts' commitment to minimizing food waste and addressing community needs.
MGM Resorts supports clients in their responsible-meetings efforts, not only with efficient venues but also waste-reducing décor and signage; sustainable food and beverage options; and outreach to help planners communicate sustainability efforts to attendees. What’s more, they offer a Mindful Meetings series that puts attendee wellness first—through fitness and mindfulness activities, and in give-back events with local charity organizations.
Fostering Diversity & 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 offers unparalleled service and venue options while standing out for its proactive approach to sustainability and community engagement. Choosing MGM Resorts for your next meeting means aligning with a company that values social responsibility, efficiency, and attendee satisfaction, ensuring a meaningful and impactful event experience.
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