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Blackstone Announces Sale of The Cosmopolitan for $5.65 Billion

Blackstone (NYSE: BX), the private equity giant, has announced the sale of The Cosmopolitan in Las Vegas for $5.65 billion. MGM Resorts (NYSE: MGM) will take over operations at the resort while the property itself will be owned by the Cherng Family Trust, Stonepeak Partners, and Blackstone Real Estate Income Trust (BREIT).

MGM is to pay $1.63 billion in cash, which according to the operator, is eight times the resort’s earnings before interest, tax, depreciation, and amortization (EBITDA). The company will be leasing the venue from its new owners for thirty years, with three 10-year renewal options. The rent is set at $200 million per year, which will increase at between 2% and 3% per annum, depending upon inflation rates.

Bill Hornbuckle MGM Resorts Chief Executive and President

We are proud to add The Cosmopolitan, a luxury resort, and casino on the Las Vegas Strip, to our portfolio. 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 premier gaming entertainment company. We look forward to welcoming The Cosmopolitan’s guests and employees to the MGM Resorts family.

Bill HornbuckleMGM Resorts Chief Executive and President

The Cherng Family Trust is an investment business run by Andrew Cherng, the co-founder and CEO of Panda Express, Stonepeak is an alternative investments fund focused on infrastructure, and BREIT is a real estate investment fund owned by Blackstone.

Blackstone acquired the Cosmopolitan in 2014, and it has since invested $500 million in renovations and enhancements. According to Jonathan Halkyard, the MGM Resorts CFO, these improvements made the deal particularly attractive. He said that the company believes it is in a position to “leverage MGM Resorts’ expertise, operating platform, and other highly achievable synergies to continue providing best-in-class service while driving growth for the property.”

Assuming it receives regulatory approval, the deal is expected to close early next year.

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