Blackstone Sells Bellagio Stake for $950M to Realty

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Realty Income Corporation, a major U.S.-based real estate investment trust (REIT), has acquired a 22% stake in the real estate of the Bellagio casino resort in Las Vegas (pictured).

It paid New York-based investment firm Blackstone $950 million for the acquisition. Inside sources first suggested Blackstone may have been exploring selling some of the Bellagio back in June.

The Bellagio, a landmark in Las Vegas, has seen its valuation soar since Blackstone’s acquisition in 2019.

Purchased from MGM Resorts for $4.25 billion, the recent deal with Realty Income pegs the hotel resort’s valuation at an impressive $5.1 billion. The rising value of Las Vegas properties is a testament to the Bellagio’s enduring appeal and the broader boom in Sin City, which has witnessed a surge in visitor volumes over the past two years.

“The Bellagio is an iconic property in the heart of the Las Vegas Strip, and we look forward to our continued ownership of this asset, now in partnership with Realty Income,” said Nadeem Meghji, head of Blackstone Real Estate Americas, in a joint press release.

“This partial sale represents another terrific outcome for BREIT shareholders.”

Blackstone’s Big Profit Moves

Realty Income’s acquisition comprises a direct purchase of the stake for $300 million and an additional investment of $650 million in preferred equity interest.

Blackstone’s foray into Las Vegas has been marked by a series of calculated investments and divestitures that have made it quite a lot of profit.

The portfolio, valued at approximately $20 billion as of March, includes several premium properties in the city. Notably, in 2021, Blackstone sold The Cosmopolitan of Las Vegas to a group of investors, including MGM, for a staggering $5.65 billion, seven years after its initial acquisition for $1.8 billion.

At the end of 2022, Blackstone agreed to offload its 49.9% stake in the MGM Grand Las Vegas and Mandalay Bay hotels to VICI Properties, a deal that reportedly generated a profit of more than $700 million.

However, Blackstone’s ventures in Las Vegas have not been without challenges. Earlier this year, the firm faced difficulties with the commercial mortgage-backed securities loan on its Hughes Center office campus, indicating potential financial strains.

The latest deal between Blackstone and Realty Income, a REIT owning more than 13,100 properties primarily through net lease agreements, is expected to conclude in the fourth quarter of the year.

MGM Resorts International, the operator of the Bellagio, will retain its 5% stake in the real estate.

High Quality Real Estate

The modern era of REITs owning the land under casinos, and operators leasing it from them in return for cash sums they can use to expand operations, is seemingly the new standard in Las Vegas.

Caesars Entertainment’s spin-off REIT, VICI Properties, is the biggest landlord on the Las Vegas Strip, followed by Penn Entertainment’s Gaming and Leisure Properties.

Big names like MGM Resorts and Wynn Resorts now often no longer own their own casino’s land. Blackstone also owns the property and land of the Aria and The Cosmopolitan, among others.

Wynn’s Encore Boston Harbor in Massachusetts is owned by the new part-owners of the Bellagio, Realty Income.

It paid $1.7 billion to acquire the land and property of the Boston venue, which it then leased back to Wynn for 30 years.

The Bellagio is Realty’s second casino property investment under the buy-lease back model.

“Realty Income seeks to invest in high-quality real estate at scale in partnership with operators who are leaders in their respective industries,” said Sumit Roy, Realty Income’s president and CEO.

“This transaction to acquire an interest in the Bellagio, an iconic property, represents our second investment in the gaming industry, and exemplifies the advantages of our size, scale, and access to capital.”

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