By Dhirendra Tripathi
The Cosmopolitan has been valued at approximately eight times adjusted earnings before interest, taxes, depreciation and amortization, inclusive of expected operational synergies and identified revenue growth opportunities, MGM said in a note.
Once the transaction is complete – expected to happen in the first half of 2022 — MGM Resorts will enter into a 30-year lease with Blackstone Real Estate Income Trust and others. The lease will come with three 10-year renewal options.
Blackstone and others 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.
Prior to the pandemic in the trailing 12 months ended February 29, 2020, The Cosmopolitan generated $959 million of net revenue and $316 million. In the second quarter ended June 30, the property generated $234 million of net revenue.
The decade-old hotel has 3,032 rooms and suites, a 110,000 square-foot casino, with high-end gaming areas for VIP guests.
The deal comes at a time when travel has come roaring back after the pandemic even as it has run into fresh hiccups with the spread of the delta variant. Last month, Hyatt Hotels (NYSE:H) said it plans to buy Apple (NASDAQ:AAPL) Leisure Group for $2.7 billion from affiliates of each of KKR and KSL Capital Partners.
In a boost for international travel, the U.S. and the U.K. have also eased travel restrictions for vaccinated passengers from various countries.
MGM Jumps on $1.62 Billion Deal to Buy The Cosmopolitan of Las Vegas
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