MGM Resorts to Acquire The Cosmopolitan of Las Vegas in $1.6 Billion Deal

The exterior of the Cosmopolitan Las Vegas, pictured in 2016. Photo Credit: Shutterstock

MGM Resorts International announced an agreement Monday with Blackstone to acquire the operations of The Cosmopolitan of Las Vegas.

The deal is for cash consideration of $1.625 billion, according to the company.

“We are proud to add The Cosmopolitan, a luxury resort, and casino on the Las Vegas Strip, to our portfolio,” said MGM Resorts CEO and President Bill Hornbuckle. “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 premiere gaming entertainment company. We look forward to welcoming The Cosmopolitan’s guests and employees to the MGM Resorts family.

Following the close of the transaction, MGM Resorts will enter into a 30-year lease agreement, with three 10-year renewal options, with a partnership among Stonepeak Partners, Cherng Family Trust, and Blackstone Real Estate Income Trust, Inc. (“BREIT”), which will acquire The Cosmopolitan’s real estate assets. MGM Resorts will pay an initial annual rent of $200 million, escalating annually at 2 percent for the first 15 years and the greater of 2 percent or the CPI increase (capped at 3 percent) thereafter.

“With over $500 million of capital invested to upgrade the property since 2014, The Cosmopolitan offers an incredible opportunity to expand our customer base and will provide greater depth of choices for our guests in Las Vegas,” said MGM Resorts CFO Jonathan Halkyard. “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.”

Prior to the COVID-19 pandemic in the trailing 12 months ended February 29, 2020, The Cosmopolitan generated $959 million of net revenue and $316 million of adjusted EBITDAR1. In the second quarter ended June 30, 2021, the property generated $234 million of net revenue and $92 million of adjusted EBITDAR.

The Cosmopolitan, a world-class contemporary luxury resort, and casino, opened in December of 2010 and underwent significant capital improvements since Blackstone acquired the property in 2014. The property features:

  • 3,032 rooms and suites that were renovated in December of 2018, most of which feature a terrace that overlooks the iconic Las Vegas Strip,
  • a 110,000 square-foot casino, with high-end gaming areas for VIP guests,
  • 26 on-trend food and beverage offerings, with 19 new concepts introduced in the last four years,
  • a 3,200 seat theater (The Chelsea),
  • Marquee nightclub and dayclub that hosts top DJs from around the world,
  • 243,000 square feet of centrally located meeting space, featuring state-of-the-art technology to accommodate both large and small groups,
  • 21,000 square feet of leased retail space, and
  • a 40,000 square foot spa and fitness facility.

The transaction is expected to close in the first half of 2022, subject to regulatory approvals and other customary closing conditions.

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