In one of many greatest on line casino offers of 2022, VICI Properties has taken full possession of MGM Grand Las Vegas and Mandalay Bay in a transaction valued at $5.5bn. [Image: Shutterstock.com]
Monster on line casino deal
In what the Wall Road Journal has deemed one of many greatest US on line casino offers of 2022, non-public fairness big Blackstone is promoting its 49.9% stake in MGM Grand Las Vegas and Mandalay Bay to New York Metropolis-based Actual Property Funding Belief (REIT) VICI Properties.
greatest landlord on the Las Vegas Strip
The WSJ revealed the deal valued at $5.5bn on Thursday, strengthening the REIT’s place as the largest landlord on the Las Vegas Strip by a substantial margin. Blackstone’s shares nosedived virtually 10% on the information, prompting author-entrepreneur Gerald Peters to share the buying and selling alternative by way of Twitter:
The transaction sees VICI — which already owned a 50.1% stake in MGM Grand and Mandalay Bay — pay Blackstone $1.27bn in money and assume the agency’s share of some $3bn in debt “at a 3.56% price via 2032,” studies CNBC.
Showing on CNBC’s Energy Lunch, VICI CEO Ed Pitoniak labeled the three.56% deal a very good one contemplating the REIT might need anticipated to pay 6%.
Advantages for each
Pitoniak used the Energy Lunch platform to disclose the velocity at which the deal, anticipated to shut within the first quarter of 2023, got here collectively after Blackstone approached him “only a couple weeks in the past.”
“We have been very excited concerning the alternative. Clearly it simplifies our construction, nevertheless it offers us complete possession of two of essentially the most iconic belongings on the Las Vegas Strip the MGM Grand and Mandalay Bay,” Pitoniak mentioned.
Whereas the transaction reinforces VICI’s S&P 500 presence, it offers Blackstone each short-term positive factors and buffers. Within the former class, the WSJ cites sources conversant in the deal who declare the sale ought to earn Blackstone a revenue of over $700m in less than three years, together with lease from the operator. As well as, the vendor acknowledged it could use the proceeds to buy higher-return belongings, comparable to industrial and rental properties.
One more reason for the deal from Blackstone’s aspect is the necessity for a monetary buffer to permit investor withdrawals.
a hike in withdrawals in October and November
The corporate noticed a hike in withdrawals in October and November from Blackstone’s actual property fund, Breit. The fund is promoting the stake within the two Vegas casinos, with proceeds going to assist Breit meet these requests.
On Thursday, Breit posted a notice to shareholders on its website to tell buyers it might enable them to withdraw solely 0.3% the fund’s internet belongings in December, after exceeding its month-to-month restrict of two% by 2.7%, or round $1.8bn, in October. The withdrawal cap baulked Blackstone shareholders, therefore the ten% fall in share value Thursday as buyers rushed to exit following information of the VICI deal.
Blackstone nonetheless owns the bodily belongings of the Cosmopolitan and the Bellagio. Firm COO Jay Grey confirmed that regardless of the VICI sale it nonetheless sees Vegas as “a excessive conviction market.”