The hotel company MGM Resorts International agreed to sell its representative complex MGM Grand Las Vegas to a joint venture with Blackstone, in an agreement valued at around 2.5 billion dollars.
MGM Resorts will receive 2.4 billion dollars in cash and 85 million dollars in capital from the hotel as part of the agreement, while the MGM Grand casino will continue to operate under a long-term lease, according to a statement on Tuesday.
Blackstone will have a 49.9 percent stake in the company. The remaining 50.1 percent will be from the MGM Growth Properties trust, which will contribute to the Mandalay Bay complex to make the purchase.
MGM Growth is a real estate investment trust that is listed separately, created in 2016 to own some of the MGM Resort properties.
By harvesting capital from its real estate business, MGM seeks to reinvest in growing markets such as sports betting and a possible casino complex in Japan. MGM Growth has an option to buy MGM Springfield in Massachusetts. MGM Resorts continues to own the CityCenter project in Las Vegas, in a joint venture with the United Arab Emirates investment firm ‘Dubai World’, and has a majority stake in MGM China, the company’s casinos in the city of Macau.
MGM Resorts, the largest casino operator on the Las Vegas Strip (that city’s main avenue), has been pressured by activist investors seeking to increase the company’s share price. In the past four years, the company has sold almost all of its total-owned resorts in the United States, including the Bellagio to Blackstone a few months ago, while making the transition to what its chief executive, Jim Murren, calls a “business model light in assets ”.
MGM Resorts said Tuesday that it is still evaluating its remaining real estate assets, including MGM Springfield and its participation in CityCenter.
The MGM Grand is the company’s original property, opened in 1993 by its founder, Kirk Kerkorian. It is one of the largest hotels in the world, with more than 6,800 rooms. Originally intended for holiday families, the casino once had an amusement park in the back. Since then, the property has evolved to include a convention center, the Hakkasan and Mansion nightclub, a high-end complex that caters to Asian players.
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