Blackstone’s big bet on The Cosmopolitan

Las Vegas – Following several years of uncertainty and foreclosure proceedings, The Cosmopolitan of Las Vegas has a new owner. In May, a division of Blackstone Group picked up the 3,000-room property for $1.7 billion in cash from Deutsche Bank, which has held the hotel since 2008.

The casino-resort has had its share of problems since its groundbreaking in 2005. Originally slated to be branded as a Grand Hyatt, the property’s developer, Ian Bruce Eichner, defaulted on a construction loan in 2008. After the hotel entered foreclosure, numerous potential buyers surfaced, including Hyatt, MGM Mirage, Starwood Hotels & Resorts Worldwide and Hilton Worldwide, but all plans fell through. When the hotel opened in 2010 it became part of Marriott International’s Autograph Collection.

Casino City Times reported that analysts believe the sale is a positive sign for the Las Vegas market. JP Morgan gaming analyst Joe Greff told Casino City Times that Blackstone Group is paying nearly 17 times The Cosmopolitan’s 2013 cash flow of $103 million, hinting at a high valuation of other upscale Strip companies such as Wynn Resorts and MGM Resorts International.

Virtual Event

HOTEL OPTIMIZATION PART 2 | Now Available On-Demand

Survival in these times is highly dependent on a hotel's ability to quickly adapt and pivot their business to meet the current needs of travelers and the surrounding community. Join us for Optimization Part 2 – a FREE virtual event – as we bring together top players in the industry to discuss alternative uses when occupancy is down, ways to boost F&B revenue, how to help your staff adjust to new challenges and more, in a series of panels focused on how you can regain profitability during this crisis.

“We also think this announcement speaks to a historically smart real estate buyer making a statement on the length of the Las Vegas Strip recovery, also a positive,” Greff said.

The Cosmopolitan’s new owner is Blackstone Real Estate Partners VII, a division of New York City-based Blackstone. The business owns $81 billion in real estate assets globally.

Suggested Articles

A new entity will combine a number of brands, including Hoxton, Gleneagles, Delano, SLS, Mondrian, SO/, Hyde, Mama Shelter, 25h and 21c Museum Hotels.

Service Properties Trust, Host Hotels & Resorts, Caesars Entertainment and Vici Properties have completed multimillion-dollar hotel deals.

Serving as an attractive alternative to traditional financing arrangements, hotel sale-leasebacks may offer a solution for many businesses.