The purchase of The Cosmopolitan has reached a "definitive agreement" between MGM Resorts and Blackstone

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The purchase of The Cosmopolitan has reached a "definitive agreement" between MGM Resorts and Blackstone

MGM Resorts International and Blackstone have entered into a binding agreement to facilitate the acquisition of The Cosmopolitan of Las Vegas's business operations by MGM Resorts International.

submitting a cash payment of $1.62 billion, which is subject to the standard adjustments for working capital. Upon the completion of the deal, MGM Resorts will engage into a leasing arrangement for a period of thirty years, with three options for further ten-year terms.

MGM Resorts will be responsible for an initial yearly rent payment of $200 million, which will grow annually at a rate of two percent for the first 15 years and then at a rate equal to the greater of two percent or the CPI increase (maximum at three percent) afterwards.

Bill Hornbuckle, CEO and President of MGM Resorts, expressed his excitement over the company's most recent acquisition, stating, "We are thrilled to add The Cosmopolitan, a premium resort and casino on the Las Vegas Strip, to our portfolio." "The Cosmopolitan brand is recognized across the world for its distinctive client base as well as its high-quality products and experiences, which makes it a great match with our portfolio and furthers our mission to be the world's preeminent gaming and entertainment company.

"We are excited to have both guests and workers of The Cosmopolitan join the MGM Resorts family," the company said.

The acquisition price is equal to nearly eight times the adjusted EBITDA, and it takes into account both the anticipated operational synergies and the prospects for revenue development.

In addition, the transaction will involve MGM forming a partnership with Stonepeak Partners, Cherng Family Trust, and Blackstone Real Estate Income Trust in order to buy the real estate assets of The Cosmopolitan.

According to Jonathan Halkyard, the Chief Financial Officer of MGM Resorts, "The Cosmopolitan offers an incredible opportunity to expand our customer base and will provide greater depth of choices for our guests in Las Vegas." Since 2014, over $500 million in capital has been invested to upgrade the property at The Cosmopolitan.

"We think that we can harness MGM Resorts' experience, operational platform, and other very attainable synergies to continue providing service that is best-in-class while simultaneously generating growth for the resort."

The Cosmopolitan made $959 million in net revenue and $316 million in adjusted EBITDAR1 in the preceding 12 months that ended on February 29, 2020. This was before the COVID-19 pandemic.

It is anticipated that the deal will be finalized during the first half of 2022, provided that it receives the necessary regulatory approvals and meets any other normal closing conditions.