MGM Resorts agrees $3.9bn lease-back deal for Las Vegas Strip’s Aria and Vdara

The group has entered into a definitive agreement to purchase Infinity World Development Corp’s 50% interest in CityCenter Holdings for $2.1bn. The agreement will make MGM Resorts the 100% owner of CityCenter, which is comprised of the Aria Resort & Casino and Vdara Hotel and Spa properties.

The purchase price represents an implied valuation of $5.8bn based on net debt of $1.5bn, after giving effect to the recently closed sale of a two-acre parcel.

MGM Resorts has also entered into an agreement with Blackstone to monetise the Aria and Vdara real estate assets. Under terms of the agreement, funds managed by Blackstone will acquire the Aria and Vdara real estate for $3.9bn in cash.

Following the acquisition, both properties will be leased to MGM Resorts for initial annual rent of $215m – which is 5.5% of the sale price.

The transactions are expected to close in the third quarter, subject to closing conditions. In a statement, the parties said the closing of the Infinity World transaction is not contingent on the closing of the transaction with Blackstone.

“CityCenter has consistently elevated the Las Vegas experience over the years, contributing to this vibrant city’s undeniable position as a top tourism and business destination,” said Bill Hornbuckle, chief executive and president of MGM Resorts.

“Uniting all of CityCenter under MGM Resorts’ corporate structure and strategy will allow us to consolidate financial results, build on efforts to strengthen our operating model and guest experience and further our vision of becoming the world’s premier gaming entertainment company.”

The Aria, which opened in 2009, contains more than 4,000 rooms and suites and a casino with 150,000 sq ft of gaming space.

Regarding the real estate agreement with Blackstone, Hornbuckle added: “This transaction demonstrates the unprecedented premium value of our real estate assets and is a testament to Aria and Vdara’s status as premier destinations on the Las Vegas Strip.

“We expect to continue executing on our asset-light strategy and utilizing the proceeds from our real estate transactions to enhance our financial flexibility and secure new growth opportunities.”

Tyler Henritze, head of US acquisitions for the Americas, for Blackstone Real Estate, said: “This transaction reflects our high conviction in Las Vegas and our strong partnership with MGM Resorts. CityCenter is a best-in-class resort and complementary addition to our portfolio of high-quality assets on the Strip. We look forward to continuing our productive collaboration with MGM Resorts.”

Earlier this year, MGM Resorts decided against progressing a plan to acquire its BetMGM joint venture partner Entain.

In January, it submitted a proposal for an all-stock deal in which every share in Entain could be exchanged for 0.6 MGM Resorts shares. This valued Entain at around $11bn, and would have seen its shareholders own 41.5% of the enlarged business.