Blackstone Real Estate Income Trust plans to sell a portion of its stake in The Bellagio Las Vegas to REIT Realty Income in a deal that values the asset at $5.1 billion. The 4,000-room Bellagio is operated by MGM Resorts International under a long-term lease.
Realty Income, a company that owns over 13,000 properties in the U.S. and Europe, is paying $300 million for the 22 percent stake in the casino and resort. Realty Income is also investing in a $650 million preferred equity stake in the property known for its 8.5-acre lake and fountain shows along the Las Vegas Strip.
After the transaction, Blackstone will hold a 73.1 percent indirect interest, and operator MGM Resorts International will keep its five percent stake in the property.
"Realty Income seeks to invest in high-quality real estate at scale in partnership with operators who are leaders in their respective industries," Realty Income President and CEO Sumit Roy said in a statement. "This transaction to acquire an interest in the Bellagio, an iconic property, represents our second investment in the gaming industry and exemplifies the advantages of our size, scale and access to capital. We are pleased to initiate our Credit Investment platform through a preferred equity investment in the Bellagio joint venture. Credit Investments are a natural adjacency to our traditional business, allowing us to provide additional value to our clients while leveraging our core competencies in transaction sourcing and structuring, and real estate and credit underwriting and monitoring."
Blackstone, one of the world’s largest real estate investors, purchased the Bellagio in 2019 from MGM Resorts in a sale-leaseback transaction that valued the property at $4.25 billion. MGM, which retained a five percent stake in the Bellagio, agreed to pay rent that steadily increases during the 30-year term of the lease and then is renewed at fair market value.
"Where you invest matters and this transaction demonstrates the strong investor demand for the high-quality assets we have assembled within BREIT," said Nadeem Meghji, head of Blackstone Real Estate Americas. "The Bellagio is an iconic property in the heart of the Las Vegas Strip and we look forward to our continued ownership of this asset, now in partnership with Realty Income. This partial sale represents another terrific outcome for BREIT shareholders."
The deal is expected to close in Q4 2023.