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MGM and Blackstone To Co-Own The Bellagio

Mia Gardner | 22 Oct 2019

A new deal has been announced between MGM Resorts International and Blackstone Real Estate. The two have entered into an agreement to co-own the Bellagio in Las Vegas, Nevada. MGM will maintain a small percentage of ownership, while Blackstone will take on the lion’s share once the new agreement is completed. The price of the sale for Blackstone is reported to be 4.25 billion US dollars for the prime real estate on the famous Las Vegas strip. The deal is not yet finalised, but is likely to be done in the final quarter of 2019.

This isn’t the first sale of land-based casinos and resorts in the region. Earlier this year, Caesar’s Entertainment sold their Rio All-suite Hotel and Casino is a bid to free up cash assets. Union Gaming, a local investment bank, has noted that this could be the start of a mass of changes in ownership all along the Las Vegas strip.

Sell-To-Lease Agreement

Players and investors, however, shouldn’t expect there to be any major changes in the way things are run in the land-based casino at the Bellagio. One of the main stipulations of this new deal is that MGM will continue to run the operation and the attached resort. The company will continue to be responsible for the day-to-day operations on all fronts, meaning there will be no break in running nor will there likely be any teething problems that are so common with new ownership.

The deal is really a sell-to-lease agreement. The intention is for MGM to free up cash as an asset for other projects, while still maintaining their presence in Las Vegas through the Bellagio. Once the deal goes through, MGM will sign a long-term lease from the new joint entity that will own the real estate.

MGM Moving Away From Real Estate

MGM Resorts International have been making some rather large shifts in their operations, and appear to be moving away from owning real estate for land-based casinos. The company went through a change in business strategy and now aims to become a global leader in managing and developing properties in the gaming, entertainment and hospitality fields.

According to a statement made by MGM, this new strategy should lead to a more financially strong company that can pay capital back to its investors. By selling off physical assets, MGM is able to be more flexible in their international operations as they won’t be tied to specific locations.

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