Casino and hospitality giant MGM Resorts International has now cleared a major regulatory hurdle in its bid to acquire operations of The Cosmopolitan of Las Vegas. The Nevada Gaming Control Board unanimously voted to recommend approval of a transfer of interest and licensing to MGM on Wednesday.
The casino giant would be receiving the interest and licensing from Nevada Property 1 LLC, a subsidiary of the company controlling The Cosmopolitan: New York-based investment management company Blackstone Group. The Nevada Gaming Commission is set to consider final approval of the deal on May 19, reports Las Vegas Review-Journal.
The transaction is valued at $5.65 billion. The Cosmopolitan is a luxury casino and hotel that opened in December 2010 and was built for $3.9 billion. It is located on the Vegas Strip, just south of the Bellagio, on the west side of Las Vegas Boulevard.
The property has 3,027 rooms in two 603-foot towers -the Boulevard Tower and the Chelsea Tower-, a 110,000-square-foot casino floor, 300,000 square feet of retail and food and beverage outlets, a 3,200-seat theater, and 150,000 square feet of meeting and convention space.
Under terms of the deal, MGM is set to acquire the operations of the property for $1.6 billion, while the underlying real estate of the venue is to be sold to a group of buyers that includes a Blackstone real estate investment trust, further reports Review-Journal.
The deal was greenlighted after a 45-minute video hearing that featured MGM Chairman and CEO Bill Hornbuckle. “It goes without saying, we are extremely excited by the acquisition,” Hornbuckle told regulators, according to The Nevada Independent.
The executive further said the company has long envisioned adding the property to its Las Vegas portfolio: the venue is neighbor to the CityCenter complex and Bellagio, owned by MGM Resorts. Acquisition of The Cosmopolitan would grant the company control of all gaming along a two-mile stretch between Flamingo Road to the north and Russell Road to the south.
“We’ve been interested in that site for some time,” Hornbuckle said, according to The Nevada Independent. “Obviously, now the marketplace has finally afforded us that opportunity. It is a great property. It is massively well-branded and well-run.”
Bill Hornbuckle, MGM Resorts CEO
Blackstone first purchased the resort about seven years ago for $1.73 billion. The sale would mark a major return on the $500 million the company invested to renovate the property. “They’ve taken it from a meager beginning and made it into a powerhouse in Las Vegas,” Hornbuckle said.
While MGM sees the possibility to add a major property to its portfolio, unlocking market mix opportunities and a customer base, board members showed concern the addition would create too large a market share for the casino operator.
However, MGM officials told the board that they intend to soon divest resort The Mirage, and that the company will have fewer Strip properties than it had more than a decade ago, reports Review-Journal.
A change to occur going forward was discussed in the meeting: the sportsbook’s operations will switch from William Hill to BetMGM, MGM’s joint venture with Entain. Additionally, MGM officials said they plan to hire Cosmopolitan employees, allowing them to keep their titles and salaries; and some employees may transfer into corporate roles.
“From a customer perspective, we think this is a win-win for both the Cosmopolitan of Las Vegas customers and MGM customers,” said Cory Saunders, MGM Resorts’ CFO, according to The Independent. Officials said MGM customers will earn access to new amenities, while Cosmopolitan customers will have access to MGM’s loyalty program and amenities.
The company plans to enter into a long-term lease with the group of buyers, and expects to receive roughly $4.4 billion in cash from that transaction. And once the transaction is closed, expected by summer, MGM will enter a 30-year lease agreement with three 10-year renewal options.
MGM is to pay an initial annual rent of $200 million, which increases by 2% annually for the first 15 years and the greater of 2% or the Consumer Price Index from then on.
Original article: https://www.yogonet.com/international/news/2022/05/05/62498-mgm-39s–16b-acquisition-of-the-cosmopolitan-receives-nevada-39s-first-regulatory-greenlight
