MGM Resorts to Buy The Cosmopolitan Las Vegas with $5.65B Deal
Las Vegas is often the land of big deals, and this week is no exception. In a stunning announcement, MGM
Ivy Griffith
Las Vegas is often the land of big deals, and this week is no exception. In a stunning announcement, MGM Resorts has shared that they’re purchasing the successful Cosmopolitan from NY equity firm, Blackstone. It’s a huge move for both MGM Resorts and The Cosmopolitan. CELEB takes a look at the deal and what it might mean for The Cosmopolitan.
Purchase Announced
Today, MGM Resorts announced that they had reached a deal to purchase The Cosmopolitan. Although there’s been rumors circulating for a few years, this is the first sign that anything substantial was happening. The deal will total a stunning $5.65 billion, with $1.6 billion purchasing the right to Cosmopolitan’s casino and hotel operating rights and $4 billion purchasing the property’s assets.
Assets belonging to the Cosmopolitan that will transfer in the sale include:
- The 3,000-room resort.
- Marquee Nightclub.
- Multiple restaurants.
- A fourth-floor swimming pool that overlooks Vegas BLVD.
- The Chelsea, a 3,200 person theater.
- 21,000 square feet of retail space.
- 40,000 square feet of spa and wellness.
The Cosmopolitan opened in 2010, and was purchased by Blackstone in 2014 for around $1.7B. They’ll walk away from the deal with a tidy sum. A press release about the sale shares, “Following the close of the transaction, MGM Resorts 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 Real Estate Income Trust, Inc. (‘BREIT’), which will acquire The Cosmopolitan’s real estate assets. MGM Resorts will pay an initial annual rent of $200 million, escalating annually at 2% for the first 15 years and the greater of 2% or the CPI increase (capped at 3%) thereafter.
‘We are proud to add The Cosmopolitan, a luxury resort and casino on the Las Vegas Strip, to our portfolio,’ said MGM Resorts CEO & President Bill Hornbuckle. ‘The Cosmopolitan brand is recognized around the world for its unique customer base and high-quality product and experiences, making it an ideal fit with our portfolio and furthering our vision to be the world’s premier gaming entertainment company. We look forward to welcoming The Cosmopolitan’s guests and employees to the MGM Resorts family.’”
The Cosmopolitan in 2021
It’s both surprising and unsurprising that Blackstone would choose now to sell. On the one hand, The Cosmopolitan is doing really well; so it’s kind of surprising to sell at the height of its growth and promise. On the other hand, The Cosmopolitan is doing really well. Even as destinations on the Strip come to life again in the wake of 2020, that year proved that the hospitality industry is sometimes a risky bet. So walking away with this tidy sum in their pockets is both shrewd and fascinating.
VegasNews reports, “Prior to the COVID-19 pandemic in the trailing 12 months ended February 29, 2020, The Cosmopolitan generated $959 million of net revenue and $316 million of adjusted EBITDAR1. In the second quarter ended June 30, 2021, the property generated $234 million of net revenue and $92 million of adjusted EBITDAR.”
And as the cherry on top, The Cosmopolitan just added Spiegelworld’s Superfrico event for their dining guests. It’s a wining, dining and entertainment extravaganza that will keep people coming back.
What This Means for The Cosmopolitan and Vegas
So what does this mean for a titan like The Cosmopolitan? Like any great merger between hospitality giants, it means more opportunities for guests and visitors. It means combining the best of both companies to provide something new. With MGM Resorts injecting its own success into the flavor of The Cosmopolitan, something great is sure to happen.
Although The Cosmopolitan was renovated in 2018, little touches will surely be different once MGM takes over. So even if you’ve been to The Cosmopolitan before, you haven’t really been yet. Plan your stay for next year; pending regulatory approval, the deal is scheduled to complete in early to mid-2022.