MGM Resorts International has agreed to acquire Infinity World Development Corp’s 50% interest in CityCenter Holdings, which is comprised of Aria Resort & Casino and Vdara Hotel and Spa, for US$2.125 billion. MGM subsequently made a deal with Blackstone to monetize the Aria and Vdara real estate assets, selling Aria and Vdara real estate for US$3.89 billion in cash, which represents a multiple of 18.1x rent. Following the acquisition, both properties will be leased to MGM Resorts for initial annual rent of US$215 million.
The purchase price for CityCenter represents an implied valuation of US$5.8 billion based on net debt of US$1.5 billion, after giving effect to the recently closed sale of a two-acre parcel. The agreement will make MGM Resorts the 100% owner of CityCenter on the Las Vegas Strip.
“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,” said MGM President and CEO Bill Hornbuckle. “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 U.S. Acquisitions 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.”
The transactions are expected to close in the third quarter, subject to certain closing conditions. The closing of the Infinity World transaction is not contingent on the closing of the transaction with Blackstone.
PJT Partners is serving as exclusive financial advisor and Weil, Gotshal & Manges is serving as legal counsel to MGM Resorts on both transactions. Moelis & Co. is serving as exclusive financial advisor and Paul Hastings is serving as legal counsel to Infinity World. Simpson Thacher & Bartlett is acting as legal counsel to Blackstone.