MGM unloads two Vegas casinos
The Bellagio and Circus Circus have officially been taken out of the company’s portfolio
The rumors of MGM Resorts International getting rid of a few of its properties were true. According to a new statement by the casino operator, it has worked out a deal that will see it stripped of its Bellagio and Circus Circus venues in Las Vegas, giving it over $5 billion in the process. That money will go toward building a “fortress balance sheet” and to provide return capital to shareholders.
The iconic Bellagio is going to be sold to The Blackstone Group for $4.2 billion, while Circus Circus will be picked up by Treasure Island’s owner, Phil Ruffin, for $825 million. Blackstone, which operates a real estate investment trust (REIT), is excited about the acquisition and its president and chief operating officer, Jon Gray, stated yesterday that “as big believers in MGM Resorts and Las Vegas, we are thrilled to partner with MGM to acquire the Bellagio on behalf of our BREIT investors.”
The deal between MGM and Blackstone didn’t come as a surprise; details first emerged last month that something was in the works. MGM will, after relinquishing the property, lease it back from Blackstone in a move that has become common among casinos in the past couple of years.
A Circus Circus sale has been floating around even longer and it was just a matter of time before a suitor was found. Ruffin, who has expressed interest in buying properties along the Vegas Strip, will pay $662.5 million in cash and let MGM float the rest in a $162.5-million note that will come due in 2024. The deal is expected to close sometime before the end of this year.