In a significant move within the hospitality and real estate sectors, Vici Properties has announced its plans to acquire the remaining 49.9% stake in the joint venture that owns the iconic MGM Grand Las Vegas and Mandalay Bay Resort. The transaction, valued at approximately $1.27 billion in cash, is set to reinforce Vici Properties’ position in the heart of the bustling Las Vegas Strip, adding a new layer of excitement and potential to these world-renowned destinations.
A Transformative Acquisition
Vici Properties and Blackstone have solidified their collaboration through a definitive agreement that will see Vici Properties taking full ownership of MGM Grand Las Vegas and Mandalay Bay Resort. Already holding a 50.1% stake in the venture, Vici’s expansion marks a significant step forward in its strategic portfolio development.
Underpinning the transaction is the property-level debt associated with these illustrious establishments, totaling $3 billion with a maturity date set for 2032. The interest on this debt is set at a fixed rate of 3.558% per annum until March 2030, forming a stable financial foundation for the acquisition.
A Strategic Partnership
The existing triple-net lease agreement between the joint venture and MGM Resorts International adds an additional layer of stability and growth potential to the transaction. This lease is projected to generate an annual rent of approximately $310 million, with the next rental escalation slated to commence on March 1, 2023. The Las Vegas Strip, known for its vibrant energy and diverse offerings, is a prime location for such a venture, and this deal stands as a testament to the collaborative prowess of the involved parties.
Strategic Vision and Future Demand Outlook
Edward Pitoniak, CEO of Vici Properties, expressed his enthusiasm for the partnership, highlighting the compelling future demand outlook for these iconic resorts. He underscored the significant growth potential of both MGM Grand Las Vegas and Mandalay Bay, positioning them as premier leisure and convention destinations that align with Vici Properties’ strategic vision.
The transaction not only represents a financial investment but also signifies a commitment to capitalizing on the evolving dynamics of the South Strip and tapping into the enduring allure of Las Vegas as a global entertainment hub.
Elevating Portfolio Concentration and Growth
The sale of these assets is poised to be a transformative step for Blackstone, allowing it to further concentrate its portfolio in high-growth sectors such as logistics and rental housing. This strategic realignment reflects Blackstone’s commitment to optimizing its portfolio for long-term growth and value creation.
Financial and Operational Outlook
Vici Properties is set to fund the transaction through a combination of cash reserves, proceeds from existing equity sale agreements, and the assumption of the remaining 49.9% of property-level debt. This well-balanced financial approach underscores Vici’s commitment to prudent financial management and positions the company for continued success.
The transaction, subject to customary closing conditions, is expected to be finalized in early 2023. As the acquisition unfolds, Vici Properties is poised to enhance its position as a prominent player in the hospitality and real estate sectors, leveraging its strategic expertise to unlock new levels of value and opportunity.
Embracing a Future of Possibilities
The acquisition of full ownership of MGM Grand Las Vegas and Mandalay Bay represents a strategic leap forward for Vici Properties, signaling its enduring commitment to shaping the future of the hospitality landscape. With a strong foundation built on collaboration, financial prowess, and operational excellence, Vici Properties is poised to continue its journey of growth, innovation, and transformation within the vibrant tapestry of Las Vegas’ iconic Strip.