MGM completes sale-leaseback of Aria and Vdara resorts to Blackstone

MGM Resorts International has closed the purchase of Infinity World Development Corp’s 50% interest in CityCenter Holdings for $2.12 billion, announced the company on Tuesday, giving the gaming giant full ownership of the Aria and Vdara resorts.

CityCenter was a 67-acre, $8.5 billion project with a cluster of skyscrapers that faced problems as the economy crashed more than 10 years ago. In connection with the closing of the transaction, MGM has now “fully retired” CityCenter’s debt. As of June 30, 2021, CityCenter had cash and cash equivalents of $307 million and total debt of $1.73 billion.

Now MGM has also announced it has closed with Blackstone the previously announced sale-leaseback agreement for Blackstone to acquire CityCenter’s real estate assets of Aria and Vdara for $3.89 billion. As stated in July, MGM is leasing the properties back for an initial annual rent of $215 million.

In addition to the Aria hotel-casino and the Vdara hotel, CityCenter features the Waldorf Astoria Las Vegas hotel, luxury mall shops, condo buildings, and more. Plans for the CityCenter project were first unveiled in 2004, but as the real estate bubble burst shortly after, the situation got complicated for the development: costs climbed and construction defects in the unfinished Harmon hotel led to a court battle among the project’s owners. CityCenter eventually opened in late 2009.

Following the transaction, MGM Resorts has leased the property from Blackstone and continues to manage, operate and be responsible “for all aspects of the property” on a day-to-day basis, states a press release.

MGM has sold multiple resorts on the Strip to Blackstone over the past few years, then leasing them back as part of its “asset-light” strategy.

Earlier this week, MGM Resorts announced it entered a definitive agreement with Blackstone to acquire the operations of The Cosmopolitan of Las Vegas for cash consideration of $1.62 billion in a deal that will separate the property from the operations of the resort, as Blackstone said Monday it will sell the property for $5.65 billion.

MGM will enter into a 30-year lease agreement, with three 10-year renewal options, with a partnership among Stonepeak Partners, Cherng Family Trust and Blackstone, which will acquire the Cosmpolitan’s real estate assets.

MGM Resorts will pay an initial annual rent of $200 million, escalating annually at 2% for the first 15 years. The transaction is expected to close in the first half of 2022, subject to regulatory approvals and other customary closing conditions.