Dealmaker: Blackstone Sells The Cosmopolitan of Las Vegas for $5.6B

Blackstone Real Estate Partners VII LP, New York, agreed to sell The Cosmopolitan of Las Vegas for $5.65 billion.

BREP acquired The Cosmopolitan in 2014 and invested more than $500 million in the property. It renovated nearly 3,000 guest rooms, build 67 new rooms and suites and improved gaming amenities and common areas. The Cosmopolitan’s guestroom performance exceeded pre-COVID levels in the second quarter.

In this transaction, BREP separated The Cosmopolitan’s operations from the underlying real estate. Under the agreement, MGM Resorts International will acquire The Cosmopolitan’s operations for $1.625 billion and sign a 30-year lease agreement with three 10-year renewal options with the Cherng Family Trust, Stonepeak Partners and Blackstone Real Estate Income Trust Inc., which will acquire The Cosmopolitan’s real estate assets.

MGM Resorts will pay an initial annual rent of $200 million, escalating 2 percent annually for the first 15 years and the greater of 2 percent or the Consumer Price Index increase (capped at 3 percent) thereafter.

Deutsche Bank Securities Inc. and PJT Partners served as financial advisors and Simpson Thacher & Bartlett LLP served as legal counsel to BREP.

Latham & Watkins LLP provided legal counsel to the Cherng Family Trust and Stonepeak Partners.

Phill Solomond, Head of Real Estate at Stonepeak, describedThe Cosmopolitan of Las Vegas as a solid asset with durable cash flows and the potential for additional upside.

The firms expect the transaction to close in early 2022.