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
Less than six months ago, Lisa Messina joined the Las Vegas Convention and Visitors Authority (LVCVA) as the first-ever chief sales officer after leading the sales team at Caesars Entertainment. A 12-year Las Vegas resident, Messina is a graduate of Cornell University’s School of Hotel Administration and serves on MPI International’s board of directors. TSNN had a chance to catch up with this dynamic leader and talk to her about her vision for the new role, current shifts in the trade show industry, creating more diversity and equity within the organization, and advice to future female leaders. Lisa Messina, Chief Sales Officer, LVCVA With Las Vegas becoming The Greatest Arena on EarthTM, what are some of the things you’re most excited about in your role? Our team was at The Big Game’s handoff ceremony earlier this month, and I couldn’t help but think, “We’re going to crush it next year!”  These high-profile events and venues not only drive excitement, but also provide unmatched opportunities for event planners. Allegiant Stadium hosts events from 10 to 65,000 people and offers on-field experiences. Formula 1 Grand Prix will take place in Las Vegas in November, after the year-one F1 race, the four-story paddock building will be available for buyouts and will also offer daily ride-along experiences that will be available for groups. And, of course, the MSG Sphere officially announced that it will open in September, ahead of schedule, with a U2 residency. It’s going to be the most technologically advanced venue as far as lighting, sound, feel, and even scent, and it will be available for buyouts and next-level sponsorships inside and outside. There’s no ceiling to what you can do when you’re doing events in Las Vegas.  Allegiant Stadium As the trade show and convention business returns to the pre-pandemic levels, what shifts are you noticing and how do you think they will impact the industry going forward? Our trade show organizers are very focused on driving customer experience. Most of our organizers are reporting stronger exhibitor numbers and increased numbers of new exhibitors, with trade shows proving to be almost or above 2019 levels. Now our organizers are really doubling down on driving attendance and focusing on the data to provide that individualized, customized experience to help attendees meet their goals and get the best value. Some companies continue to be cautiously optimistic with their organizational spend when it comes to sending attendees, but I think it will continue to improve. As the U.S. Travel Association makes more progress on the U.S. visa situation, we also expect a growing influx of international attendees. What are some innovative ways the LVCVA helps trade show and convention organizers deliver the most value for their events? We focus on customer experience in the same way that trade show organizers are thinking about it. We got rave reviews with the West Hall Expansion of the Las Vegas Convention Center (LVCC), so over the next two years, we will be renovating the North and the Central halls, which will include not just the same look and feel, but also the digital experiences that can be leveraged for branding and sponsorship opportunities.  Vegas Loop, the underground transportation system designed by The Boring Company, is also a way we have enhanced the customer experience. Vegas Loop at the LVCC has transported more than 900,000 convention attendees across the campus since its 2021 launch. Last summer, Resorts World and The Boring Company opened the first resort stop at the Resorts World Las Vegas , with plans to expand throughout the resort corridor, including downtown Las Vegas, Allegiant Stadium and Harry Reid International Airport. The LVCVA also purchased the Las Vegas Monorail in 2020, the 3.9-mile-long elevated transportation system that connects eight resorts directly to the convention center campus. This is the only rail system in the world that integrates fares directly into show badges and registration. For trade show organizers, these transportation options mean saving time, money and effort when it comes to moving groups from the hotels to LVCC and around the city. Also, the more we can focus on building the infrastructure around the convention center, the more it supports the customer experience and ultimately supports our trade show organizers. Scheduled to debut in Q4, Fontainebleau Las Vegas will offer 3,700 hotel rooms and 550,000 square feet of meeting and convention space next to LVCC.  What are some of the plans for advancing DEI (diversity, equity and inclusion) within your organization? We’re currently partnering with instead of working with a leading consulting firm, to lay the foundation and create a solid DEI plan and be the leader when it comes to DEI initiatives. The heart of that journey with the consulting firm is also talking to our customers about their strategic approaches to DEI and driving innovation in this space.  What are your favorite ways to recharge? My husband and I have an RV and we’re outdoorsy people. So, while we have over 150,000 world-class hotel rooms and renowned restaurants right outside our doorstep, one of my favorite things to do is get out to Red Rock Canyon, the Valley of Fire, and Lake Mead. Five of the top national parks are within a three-hour drive from Las Vegas, so there’s a lot you can do. We love balancing the energy of Las Vegas with nature, and we’re noticing that a lot of attendees add activities off the Strip when they come here.  Valley of Fire What advice would you give to women following leadership paths in destination marketing? I think it’s about being laser-focused on what you want to accomplish; building a team around you that lifts you and helps you achieve your goals; and being humble and realizing that you do it as a group. No one gets this done alone. Thankfully, there are a lot of women in leadership in this organization, in our customers’ organizations, and in this city that we can be really proud of. We’re a formidable force that is making things happen.   This interview has been edited and condensed. This article is exclusively sponsored by the Las Vegas Convention & Visitors Authority. For more information, visit HERE.