Mandalay Bay, MGM Grand Sold to Joint Venture in $4.6B Deal

MGM Resorts will lease both properties for an initial rent of $292 million.
Lauren MuskettJanuary 15, 2020
Mandalay Bay, MGM Grand Sold to Joint Venture in $4.6B Deal

MGM Resorts International is selling Las Vegas properties MGM Grand and Mandalay Bay to a joint venture in a deal valuing the properties at $4.6 billion, the companies said.

The joint venture includes investment firm Blackstone Group and real estate investment trust MGM Growth Properties.

Under the terms of the deal, MGM Growth Properties will own 50.1% of the joint venture and Blackstone Real Estate Income Trust will own 49.9%. The joint venture will lease both properties to MGM Resorts, which will continue day-to-day management and operation of the properties, for an initial rent of $292 million.

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MGM Resorts anticipates to receive nearly $2.4 billion of net cash proceeds and $85 million in MGM Growth Properties operating partnership units.

“Our corporate objective remains crystal clear,” MGM Resorts chief executive officer Tim Murren said. “We will continue to monetize our owned real estate assets, which facilitates our strong focus on returning capital to our shareholders, while also retaining significant flexibility to pursue our visible growth initiatives, including Japan and sports betting.”

The deal is likely to be concluded in the first quarter of 2020.

MGM has faced investor pressure to shift its business model to developing and managing properties. Last year, the company announced it would be cutting labor costs by cutting jobs and changing sourcing policies. It reportedly cut 1,000 jobs.

In October, it announced it was selling the Bellagio to a joint venture with Blackstone for $4.25 billion. In December, it sold Circus Circus to Phil Ruffin for $825 million.

Last January, MGM announced it had named Corvex Management founder Keith Meister to its board of directors. Meister was a protégé of activist investor Carl Icahn. Corvex had built up a nearly 4% stake in the company and undertaken a review of its holdings.

Blackstone president Jon Gray said the deal showed Blackstone’s continuing strong conviction in Las Vegas.

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