MGM Resorts International on Thursday said it has entered into a definitive agreement to purchase Infinity World Development Corp’s 50% interest in CityCenter Holdings, LLC for $2.125 billion.
The parties said the purchase price represents an implied valuation of $5.8 billion, based on net debt of $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, which is comprised of Aria Resort and Casino and Vdara Hotel and Spa.
MGM Resorts said it also entered into a definitive agreement with Blackstone to monetize the Aria and Vdara real estate assets, pending the close of the equity purchase agreement between MGM Resorts and Infinity World.
Under terms of the agreement, funds managed by Blackstone will acquire the Aria and Vdara real estate for $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 $215 million.
The companies said 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.
“Uniting all of CityCenter under MGM Resorts’ corporate structure and strategy will allow us to consolidate financial results, build on efforts to strengthen our operating model and guest experience, and further our vision of becoming the world’s premier gaming entertainment company, Bill Hornbuckle, CEO and president of MGM Resorts, said in a statement.
Regarding the real estate agreement with Blackstone, Hornbuckle added, “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. 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 US 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.”
PJT Partners is serving as exclusive financial advisor and Weil, Gotshal & Manges LLP is serving as legal counsel to MGM Resorts on both transactions. Moelis & Company LLC is serving as exclusive financial advisor and Paul Hastings LLP is serving as legal counsel to Infinity World. Simpson Thacher & Bartlett LLP is acting as legal counsel to Blackstone.
The MGM Resorts portfolio encompasses 31 unique hotel and gaming destinations globally. The company's 50/50 venture, BetMGM, LLC, offers US sports betting and online gaming through such brands as BetMGM and partypoker. The company currently is pursuing targeted expansion in Asia through the integrated resort opportunity in Japan.
