The company said it was selling its Circus Circus Las Vegas hotel for $825 million to an affiliate of Treasure Island owner Phil Ruffin. The transaction is expected to close in the fourth quarter.
Under the terms, the two companies will form a joint venture, with Blackstone controlling 95% and MGM 5%. MGM Resorts will then lease the property from the joint venture, continuing to operate and manage the facilities.
In addition to the 5% stake, MGM will receive $4.2 billion cash, the company said in a statement. The deal also is expected to close in Q4.
"We will use the proceeds from this transaction, together with the proceeds from the pending sale of Circus Circus Las Vegas, to build a fortress balance sheet and return capital to shareholders," MGM CEO and Chairman Jim Murren said in a statement.
Shares of MGM rose 0.5% to $28 in after-hours trading. They finished the regular session off 0.4% at $27.87.