MGM Growth Properties and Blackstone Real Estate Income Trust to Acquire MGM Grand and Mandalay Bay
January 15, 2020
MGM Growth Properties and Blackstone Real Estate Income Trust today announced that MGP and BREIT have entered into a definitive agreement to form a new joint venture to acquire the Las Vegas real estate assets of the MGM Grand and Mandalay Bay for $4.6 billion. In addition, BREIT will purchase $150 million in MGP Class A shares. MGP will own 50.1% of the joint venture, and BREIT will own 49.9%.
At closing, MGM Resorts International will enter into a long-term triple net master lease for both properties and provide a full corporate guarantee of rent payments. MGM Resorts will continue to manage, operate and be responsible for all aspects of the properties on a day-to-day basis, with the joint venture owning the properties and receiving rent payments.
“We are pleased to announce this partnership with BREIT, which illustrates the numerous opportunities available to grow our business and emphasizes the strong institutional demand for gaming real estate assets,” said James Stewart, CEO of MGP. “Along with the contemplated cash redemption of $1.4 billion of MGM’s operating partnership units as announced by MGM, we expect this transaction to be accretive to AFFO while allowing us to maintain pro rata net leverage of 5.6x.”
Jon Gray, Blackstone president and COO, said, “This transaction reflects our continuing strong conviction in Las Vegas. We are pleased to once again partner with MGM Resorts, a world-class operator, as well as MGM Growth Properties.”
Tyler Henritze, head of U.S. acquisitions for Blackstone Real Estate, said, “Similar to the Bellagio, owning these two premier Las Vegas assets under a long-term lease with MGM provides stable cash flow and excellent downside protection for our BREIT investors. We look forward to growing our partnership with MGM Resorts and MGM Growth Properties, a best-in-class company.”
Together, the MGM Grand and Mandalay Bay comprise 9,743 rooms, approximately 3 million square feet of meeting space and approximately 300,000 square feet of casino space across 226 acres on the Las Vegas Strip. MGM Resorts’ initial annual rent will be $292 million. MGP currently owns the Mandalay Bay real estate, and MGM Resorts currently owns the MGM Grand real estate.
MGP is a REIT focused on the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts. Blackstone Real Estate has a deep history and expertise in the Las Vegas real estate market across office, hospitality and residential asset classes, including BREIT’s recent acquisition of the Bellagio for $4.25 billion.
This transaction is expected to close in the first quarter of 2020, subject to certain customary closing conditions.
Partner Voices
MGM Resorts is committed to fostering an inclusive and diverse culture, not just among employees and guests but also within its supply chain. The company prioritizes procuring goods and services from businesses owned by minorities, women, veterans, people with disabilities, LGBTQ individuals and those facing economic disadvantages. This commitment is integral to MGM Resorts' global procurement strategy.
Through its voluntary supplier diversity program, MGM Resorts actively identifies and connects certified diverse-owned suppliers to opportunities within its supply chain. The company is on track to spend at least 15% of its biddable procurement with diverse-owned businesses by 2025, demonstrating that supplier diversity is not only a social responsibility but also a strategic business imperative.
Supplier diversity isn’t just the right thing to do – it’s good for business. A diverse supply chain allows access to a broader range of perspectives and experience, helping to drive innovation, entrepreneurship and resilience, while strengthening communities. At MGM Resorts, engaging diverse suppliers ensures best-in-class experiences for guests and clients. Supplier diversity ensures a more resilient supply chain while supporting economic development in the communities in which it operates.
The impact of MGM Resorts' supplier diversity initiatives is significant. In 2023, these efforts supported over 3,500 jobs across more than 30 states, contributed over $214 million in income for diverse-owned businesses and generated more than $62 million in tax revenue. The story extends beyond the numbers – it reflects the tangible benefits brought to small and diverse-owned businesses, fostering economic empowerment in their communities.
MGM Resorts also supports the development and business skills of diverse-owned businesses through investment, mentorship and education. Through the MGM Resorts Supplier Diversity Mentorship Program, the company identifies, mentors and develops diverse-owned businesses to fill its future pipeline, while providing businesses with tools and resources to empower and uplift. Since 2017, the program has successfully graduated 105 diverse-owned businesses and is on track to achieve its goal of 150 graduates by 2025.
MGM Resorts’ commitment to supplier diversity not only enhances its business operations but also plays a crucial role in uplifting communities and fostering economic development. This approach reinforces the idea that diversity is a powerful driver of innovation and resilience, benefiting both the company and the wider community.
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