MGM Resorts International Announces Transaction to Acquire the Operations of The Cosmopolitan of Las Vegas

Rhea-AI Summary

MGM Resorts International has announced a definitive agreement to acquire The Cosmopolitan of Las Vegas from Blackstone for $1.625 billion. This transaction, representing an approximate eight times adjusted EBITDA, includes operational synergies and revenue growth potential. MGM will enter a 30-year lease for the property while maintaining a strong financial commitment of an initial annual rent of $200 million. The Cosmopolitan generated $234 million in net revenue during Q2 2021 and has seen over $500 million in capital improvements since 2014.

Positive

• Acquisition price aligns with an attractive EBITDA multiple of approximately 8x.
• The Cosmopolitan has generated significant revenue, with $234 million in Q2 2021.
• Over $500 million invested in capital improvements enhances the property's attractiveness.
• MGM Resorts aims to leverage operational synergies to drive growth.

Negative

• Initial rent of $200 million may strain cash flow even with revenue generation.
• Transaction completion is subject to regulatory approvals, which may delay integration.

LAS VEGAS, Sept. 27, 2021 /PRNewswire/ -- MGM Resorts International (the "Company" or "MGM Resorts") (NYSE: MGM) today announced that the Company has entered into a definitive agreement with Blackstone to acquire the operations of The Cosmopolitan of Las Vegas (the "property" or "The Cosmopolitan") for cash consideration of $1.625 billion, subject to customary working capital adjustments.

The purchase price represents a multiple of approximately eight times adjusted EBITDA, inclusive of expected operational synergies and identified revenue growth opportunities.

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."

"With over $500 million of capital invested to upgrade the property since 2014, The Cosmopolitan offers an incredible opportunity to expand our customer base and will provide greater depth of choices for our guests in Las Vegas," said MGM Resorts CFO Jonathan Halkyard. "We believe that we can leverage MGM Resorts' expertise, operating platform and other highly achievable synergies to continue providing best-in-class service, while driving growth for the property."

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 EBITDAR¹.

The Cosmopolitan, a world-class contemporary luxury resort and casino, opened in December of 2010 and underwent significant capital improvements since Blackstone acquired the property in 2014. The property features:

• 3,032 rooms and suites that were renovated in December of 2018, most of which feature a terrace that overlooks the iconic Las Vegas Strip,
• a 110,000 square-foot casino, with high-end gaming areas for VIP guests,
• 26 on-trend food and beverage offerings, with 19 new concepts introduced in the last four years,
• a 3,200 seat theater (The Chelsea),
• Marquee nightclub and dayclub that hosts top DJs from around the world,
• 243,000 square feet of centrally located meeting space, featuring state-of-the-art technology to accommodate both large and small groups,
• 21,000 square feet of leased retail space, and
• a 40,000 square foot spa and fitness facility.

The transaction is expected to close in the first half of 2022, subject to regulatory approvals and other customary closing conditions.

¹ Calculated as EBITDA before rent, impairment loss and pre-opening expenses, and after corporate expenses.

ABOUT MGM RESORTS INTERNATIONAL
MGM Resorts International (NYSE: MGM) is an S&P 500® global entertainment company with national and international locations featuring best-in-class hotels and casinos, state-of-the-art meetings and conference spaces, incredible live and theatrical entertainment experiences, and an extensive array of restaurant, nightlife and retail offerings. MGM Resorts creates immersive, iconic experiences through its suite of Las Vegas-inspired brands. The MGM Resorts portfolio encompasses 31 unique hotel and destination gaming offerings in the United States and Macau, including some of the most recognizable resort brands in the industry such as Bellagio, MGM Grand, ARIA and Park MGM. The Company's 50/50 venture, BetMGM, LLC, offers U.S. sports betting and online gaming through market-leading brands, including BetMGM and partypoker. The Company is currently pursuing targeted expansion in Asia through the integrated resort opportunity in Japan. Through its "Focused on What Matters: Embracing Humanity and Protecting the Planet" philosophy, MGM Resorts commits to creating a more sustainable future, while striving to make a bigger difference in the lives of its employees, guests, and in the communities where it operates. The global employees of MGM Resorts are proud of their company for being recognized as one of FORTUNE® Magazine's World's Most Admired Companies®. For more information, please visit us at www.mgmresorts.com. Please also connect with us @MGMResortsIntl on Twitter as well as Facebook and Instagram.

FORWARD-LOOKING STATEMENTS
Statements in this release that are not historical facts are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, and involve risks and/or uncertainties, including those described in the Company's public filings with the Securities and Exchange Commission. Forward-looking statements can be identified by the use of forward-looking terminology such as "believes," "expects," "could," "may," "will," "should," "seeks," "likely," "intends," "plans," "pro forma," "projects," "estimates" or "anticipates" or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. The Company has based forward-looking statements on management's current expectations and assumptions and not on historical facts. Examples of these statements include, but are not limited to, the Company's expectations regarding the closing of the acquisition and any benefits expected to be received from the acquisition. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise, and the Company may not be able to realize them. The Company does not guarantee that the transaction or other events described herein will happen as described (or that they will happen at all). These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated in such forward-looking statements include risks related to the Company's ability to complete the transaction on the terms described herein or all, the satisfaction of the closing conditions, including the receipt of regulatory approvals, to which the completion of the transaction is subject, which could delay or prevent the completion of the transaction, the continued impact of the COVID-19 pandemic on the Company's business, the effects of economic conditions and market conditions in the markets in which the Company operates and competition with other destination travel locations throughout the United States and the world, the design, timing and costs of expansion projects, risks relating to international operations, permits, licenses, financings, approvals and other contingencies in connection with growth in new or existing jurisdictions and additional risks and uncertainties described in the Company's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those other forward-looking statements.

MGM RESORTS CONTACTS:

Media:	Investment Community:
BRIAN AHERN	CATHERINE PARK
Director, Media Relations	Executive Director, Investor Relations
media@mgmresorts.com	cpark@mgrmesorts.com

 

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SOURCE MGM Resorts International

FAQ

What is the purpose of MGM's acquisition of The Cosmopolitan?

The acquisition aims to expand MGM's portfolio and enhance its position as a leading gaming entertainment company.

What is the financial impact of the Cosmopolitan acquisition on MGM?

The transaction is valued at $1.625 billion, with implications for MGM's cash flow and future earnings potential.

When is MGM Resorts expected to close the acquisition of The Cosmopolitan?

The acquisition is expected to close in the first half of 2022, pending regulatory approvals.

How much has been invested in The Cosmopolitan since 2014?

Over $500 million has been invested to upgrade The Cosmopolitan since 2014.

What are the key features of The Cosmopolitan after renovations?

The Cosmopolitan features 3,032 rooms, a 110,000 square-foot casino, diverse dining options, and extensive meeting spaces.