MGM Resorts International seals deal to acquire Cosmopolitan Las Vegas
May 19, 2022
MGM Resorts International has finalized its move to purchase The Cosmopolitan of Las Vegas. The company has announced Wednesday the closing of a transaction worth $1.625 billion with Blackstone.
Thus, MGM Resorts International is now officially owning "The Cosmopolitan".
In the announcement, MGM Resorts CEO and President, Bill Hornbuckle, addressed the defining moment of the company as it expands its lucrative business on the Las Vegas Strip.
"This is a big moment for our company and the Las Vegas Strip. The Cosmopolitan of Las Vegas has already established itself as one of the Strip's premier resorts with an iconic brand, well-curated experiences, and a loyal customer base," Hornbuckle said
"We couldn't be more excited to bring them into our portfolio of world-class operations," he added.
In September 2021, MGM Resorts International initiated the move, announcing that it is paying $1.6 billion to Blackstone for the operating rights of The Cosmopolitan.
The casino titan later confirmed that it was expecting the transaction to be finalized in the second quarter of 2022. Earlier than expected, however, the transaction managed to be closed at the midway point of it.
"We're also thrilled to have the talented group of CoStars from The Cosmopolitan joining the MGM Resorts family," Hornbuckle added.
"We look forward to improving upon The Cosmopolitan's already strong results by offering their customers access to the extensive and exclusive amenities and other benefits only MGM Resorts can provide," he continued.
With the acquisition being finished, MGM Resorts International will be entering the 30-year lease agreement with three 10-year renewal options.
The company will start by paying $200m for the first annual rent. Within the first 15 years, MGM will face a two percent increase in the rent cost annually, and up to three percent (CPI increase) later on.
The Cosmopolitan's lucrative business
By acquiring The Cosmopolitan, MGM has indeed strengthened its position on the Las Vegas Strip. As a gambling venue itself, The Cosmopolitan is proving to be a lucrative establishment to any company owning it.
The Cosmopolitan had generated $1.1 billion of net revenue, which includes $416 million earned before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR), for the 12-months period ending on March 31, 2022.
With it now being the leading contemporary luxury resort and casino, The Cosmopolitan began its operation in December 2010. The company experienced a radical capital improvement after Blackstone acquired its property from Deutsche Bank in 2014.
As quoted from Casino.org, Blackstone reportedly purchased the gaming venue for $1.74 billion.
In the following year after the first acquisition by Blackstone, The Cosmopolitan underwent an immense renovation to its property.
From 2018 onward, The Cosmopolitan's property has grown to feature: 3,033 rooms and suites, 110,000 square-feet casinos, 3,200-seat theater (The Chelsea), 43,000 square-feet spa and fitness facility, 36,000 square feet of leased retail space, 3,000 square foot spa and fitness facility, 243,000 square feet of centrally located meeting space, Marquee nightclub and day club, and 26 on-trend food and beverage offerings.
Blackstone is said to have spent $500 million to spruce up The Cosmopolitan's property, which means that it is doubled its investment.