To paraphrase the immortal words of Kenny Rogers: You gotta know when to hold ‘em, know when to fold ‘em, know when to walk away… and know when to sell your 3,000-room hotel, casino, nightclub, and resort for billions of dollars.
That’s the tune investment management group Blackstone was singing Monday when it announced it had cashed in Las Vegas’s Cosmopolitan for a cool $5.65 billion.
Betting On The House
Blackstone first acquired the resort in 2014 for $1.8 billion, and has since upped the ante with an additional $500 million spent on renovations and upgrades. Now, seven years later, the gamble has paid off. The company scored a $4.1 billion profit in the sale, according to the Wall Street Journal — earning 10 times the amount of equity it invested.
The sale was completed in pieces, with ownership of the two-tower complex now split from hotel and casino operations:
- MGM Resorts International — which already owns strip neighbors The Mirage, New York-New York, and Mandalay Bay — is acquiring the hotel and casino operations’ rights for $1.625 billion.
- The property sold for an additional $4 billion, to a buyers group that includes Stonepeak Partners, the Cherng Family Trust (an entity owned by the founders of Panda Express), and a real-estate investment fund owned by Blackstone.
Buying a part of the casino you’re selling? That’s the real estate equivalent of doubling down.
On A Heater: Tourism to Vegas has surged in the post-Covid vaccine world. In July, 3.3 million visitors descended on the city — or around 90% of pre-pandemic levels. The Cosmo alone has hovered at roughly 87% capacity through September, with an average daily room rate of $448, according to Blackstone.
Strip Stakes: Blackstone’s sale is just the latest real estate action in Sin City. In August, investment trust Vici Properties, a 2017 spin-off from Caesars Entertainment, agreed to purchase MGM Growth Properties (itself a spin-off from MGM Resorts) for $17.2 billion. And earlier this year, Las Vegas Sands Corp, which operated the Venetian resort among others, sold its properties to Apollo Global Management for $6.25 billion.