MGM Grand and Mandalay Bay Sold for $4.6 Billion

MGM Grand and Mandalay Bay have been sold for $4.6 billion. Which is only news to you if you don’t read headlines, but whatever.

According to a news release, MGM Growth Properties (MGP) and Blackstone Real Estate Income Trust (BREIT) will co-own the resorts. MGP will own 50.1% of the joint venture, and Blackstone will own 49.9%. Blackstone also owns Cosmopolitan.

Yeah, not exactly sexy, but news is news.

Mandalay Bay

Customers won’t notice any changes at Mandalay Bay, so don’t freak out.

The bottom line is this deal is similar to the recent sale of Bellagio in that MGM Resorts will continue to operate the resorts.

The sale of MGM Grand and Mandalay Bay are part of a larger “asset light” strategy on the part of MGM Resorts. It also seems to be part of a larger “boring us to death” strategy involving REITs, lots of initialisms and companies paying themselves rent.

MGM Resorts’ initial annual rent will be $292 million. Which shouldn’t be a big deal until the recession hits, then everything goes to hell in a handbasket.

MGM Grand

MGM Grand is the green one.

The deal is expected to close in the first quarter of 2020.

13 thoughts on “MGM Grand and Mandalay Bay Sold for $4.6 Billion

  1. Coop

    Someday I hope this can be explained to us unwashed masses. What I can understand is that rich people don’t loose money. They make strange business deals and let the customer or tax payer absorb their losses. Excellent business model. “The Enemy is very shrewd and will try to get you to doubt.”

    Reply
    1. JeffinOKC

      Lemme try this example….
      Your uncle bought a grocery store in 1975 for 100 thousand dollars. Then a company that only owns and rents real estate offers him 1 million dollars today. He pockets a lot of money. Then, the real estate company decides to rent the grocery store back to your uncle for 5 thousand dollars a month. Your uncle is still in the grocery business, and the real estate company has a 45 hundred dollars a month payment on the building. Uncle adds speciality coffee, craft beer and gasoline with his free cash, and the real estate company makes a 10 percent profit on their low risk investment

      Reply
      1. Coop

        Thank you Jeff in OKC. I get it. My rich Uncle (whom no longer understands his customer) who worked hard all of his life and earned a huge return on investment (must have squandered that profit) sells his soul. Gonna retire right? oh but no. Only to continue working for someone else’s profit? I wonder if he will be better at his job or worse? I am afraid this does not end well for my Uncle. But now with investment firms involved maybe the casino’s can be the next industry labeled “to big to fail”. Then cue the unwashed masses. We will bail them out. Cause didn’t we love that one.

        Reply
        1. alex

          Actually, it’s clear that you don’t get it, Coop. You’re making this into some grand scheme that somehow results in customers losing out. It’s not. It’s just back office finance stuff.

          Hate MGM Resorts all you want…just do it for a valid reason. This sale and lease back will have zero impact on customers.

          MGM Resorts is still in charge of everything. And that means they will (almost certainly) make questionable decisions that result in people like you hating them even more.

          Reply
          1. David Feldman

            I don’t know MGM finances but the concern is always pulling the profit/assets out of one company and putting it into another making the first company weaker. Look at Sears for example, CEO sold all the properties to himself, did nothing with the money and let sears keep hemorrhaging cash until bankruptcy.

            While there will be no immediate effect, there is the concern that they will be more volatile in a market downturn which could cause rash decisions or bankruptcy. Hopefully in this case though MGM has a good plan for the cash that will make them more money in the long run than the land itself. I know there was talk on here before that they need the cash to expand internationally.

          2. Coop

            Alex
            What do you think? Just fun ways to play Monopoly for these folks? Investment Companies are much smarter than this.
            I think you may be missing something. A company loosing money is not an attractive investment. right? Why would a company (oh wait…evil investment firm…bank to big to fail) bail out a loosing casino that does not have their act together. Rich hands washing rich hands. When the Investor eventually off’s the losses (cause they will never recover under current management) to a company than CAN go Bankrupt… Do you know what that means…Tax payers!!!! It is truly how the rich get richer. We allow it.

  2. Phil K

    Wow, we sure have come a long way from the early 2000s when all of the property consolidation/trading/purchasing was happening with MGM and Caesars. Just shows that nothing is permanent, and even the brightest financial minds make big mistakes. I am sure there is going to be a lot more of these creative land deals in the works, but it sure would be nice if someone got serious and put up a property that treated people like people, not sheep.

    Reply

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