MGM Resorts sells casinos for billions, rents for huge sums

In a burst of multibillion-dollar deals, Las Vegas has seen investors wage mountains of wealth the past fewer years to ain high-profile casino-resorts.

Those income person besides shown what casino operators — well, 1 successful peculiar — are consenting to wage to rent these properties.

MGM Resorts International has reached deals since autumn 2019 to lease Bellagio, MGM Grand, Mandalay Bay, Aria, Vdara, and, arsenic announced this week, The Cosmopolitan of Las Vegas.

Its archetypal yearly rent ranges from $200 million for The Cosmopolitan to $292 cardinal for MGM Grand and Mandalay Bay.

All but 1 of the deals progressive sale-leasebacks that netted MGM a luck successful proceeds, including more than $4 cardinal for Bellagio alone. Moreover, each of the deals progressive the aforesaid institution connected the different broadside of the table, New York fiscal elephantine Blackstone, which has been gobbling up existent property successful Southern Nevada for years.

Still, the nine-figure rental rates amusement what MGM is consenting to wage to support moving its properties and to instrumentality implicit different towering edifice connected the Strip, The Cosmopolitan, without buying its existent estate.

A landlord and tenant find a casino-resort’s rental complaint based connected a property’s earnings, stability, marketplace and imaginable firm guarantee, according to Truist Securities expert Barry Jonas.

When MGM announced successful July that it was selling Aria and Vdara to Blackstone for astir $3.9 cardinal successful currency and renting them back, it noted the sales price was a small implicit 18 times its rent, which initially is $215 cardinal a year.

At the time, Tyler Henritze, caput of existent property acquisitions successful the Americas for Blackstone, said specified deals were charismatic for respective reasons including “long-term leases with unchangeable currency flows and nary superior expenditure obligations, and successful this case, a afloat firm guaranty of rent payments from a best-in-class operator.”

After Blackstone purchased aggregate MGM-operated properties connected the Strip, it’s present selling The Cosmopolitan for $5.65 billion. As portion of the deal, MGM is acquiring the resort’s operations broadside for much than $1.6 cardinal and leasing the spot from a radical of owners.

MGM did not respond to a petition for remark Friday connected its rental rates.

The casino concatenation has made a luck selling its existent property arsenic portion of its “asset-light” strategy, though arsenic with immoderate deal, determination are risks to leasing a edifice alternatively than owning the spot outright.

Jonas, for one, noted determination is simply a “finality” to selling a gathering and losing power implicit it.

Plus, arsenic Macquarie Capital expert Chad Beynon pointed out, tenants “always beryllium that rent” and person to acceptable speech wealth each twelvemonth to wage their landlord.

Even aft the coronavirus pandemic sparked catastrophic occupation losses and led to nationwide casino closures, turning the Strip into a ghost town for a while, casino landlords came retired OK.

One large landlord is present buying different successful a $17 billion-plus deal.

Caesars Entertainment spinoff Vici Properties announced successful August that it was acquiring MGM Resorts spinoff MGM Growth Properties, putting existent property ownership of galore of Las Vegas’ biggest hotel-casinos nether 1 company.

After the woody was announced, Vici main enforcement Edward Pitoniak said the 2 casino landlords had collected “100 percent of our rent truthful acold done COVID connected clip and successful cash.”

Contact Eli Segall astatine esegall@reviewjournal.com oregon 702-383-0342. Follow @eli_segall connected Twitter.