The Cosmopolitan of Las Vegas is real estate’s "most profitable single asset sale ever" for Blackstone

The transaction that saw Blackstone sell The Cosmopolitan of Las Vegas for $5.65 billion was the “most profitable single asset sale ever” for the company’s real estate business, Blackstone said in an earnings report Thursday.

The high-priced transaction included a $1.625 billion lease-back deal for MGM Resorts International to acquire its operations in May. Though Blackstone did not disclose the profits from the deal, The Wall Street Journal previously reported that Blackstone’s total profits, including cash flow from operations, would be around $4.1 billion.

This deal also marked the latest high-priced transaction in Las Vegas that did not produce any funds in real estate transfer taxes, according to county records cited by Las Vegas Review-Journal, an issue that Gov. Steve Sisolak has said lawmakers should take up in the next legislative session. This is possible via an exemption allowed under a 2007 state law when property owners transfer real estate to a subsidiary to spare companies from paying the tax, which is regularly applied on sales of homes, apartment buildings and other sites. 

The Strip casino landlord Blackstone told the Review-Journal last month that it abides by all laws and follows the tax code “in every situation” and that it was “incredibly proud” of what it delivered for Nevada through its investment in the resort.

MGM Resorts entered into a 30-year lease agreement, with three 10-year renewal options, with a partnership among Stonepeak Partners, Cherng Family Trust (operators of fast-food chain Panda Express) and Blackstone Real Estate Income Trust, Inc., which acquired The Cosmopolitan's real estate assets. MGM leased the property for an initial annual rent of $200 million.

Employees of The Cosmopolitan were surprised by Blackstone in May with individual $5K bonuses. As many as 5,000 workers were honored with the special recognition, totaling $27 million, handed out ahead of Blackstone’s planned sale of the resort’s operations to MGM Resorts International.

Blackstone posted a net loss of $29.4 million for the second quarter of 2022. This compares with a profit of $1.3 billion for the same period a year earlier.