MGM Grand and Mandalay Bay to be Sold to Blackstone Joint Venture

MGP Growth Properties, Blackstone Real Estate Income Trust form joint venture to acquire MGM Grand and Mandalay Bay in Las Vegas for $4.6 billion.
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MGM Resorts International (MGM) - Get Report on Tuesday announced it agreed to sell its MGM Grand and, through its MGM Growth Properties group, Mandalay Bay in Las Vegas to a joint venture that includes private-equity and real-estate giant Blackstone Group (BX) - Get Report in a combined $4.6 billion deal.

Under terms of the deal, MGM Resorts will form a new joint venture between its MGM Growth Properties (MGP) - Get Report and Blackstone Group's Blackstone Real Estate Income Trust (BREIT) that will acquire the MGM Grand Las Vegas real estate assets. 

BREIT will also purchase $150 million in MGP Class A shares, Blackstone said in its own press release.  

MGP currently owns the Mandalay Bay, while MGM Resorts currently owns the MGM Grand. Upon completion of the transaction, MGP will own 50.1% of the joint venture, and BREIT will own 49.9%. 

"These announcements represent a key milestone in executing the company's previously communicated asset-light strategy, one that enables a best-in-class balance sheet and strong free cash flow generation to provide MGM Resorts with meaningful strategic flexibility to create continued value for our shareholders," MGM Resorts CEO Jim Murren said in a statement.

The deal is similar to MGM Resorts' sale of its flagship Bellagio casino in Las Vegas to Blackstone last year. In October, Blackstone said its private real-estate investment trust, known as BREIT, would take control of the Bellagio through a $4.25 billion joint venture with MGM Resorts.

The MGM Grand Las Vegas includes a hotel and resort as well as three condominium towers. MGM, which retained a 5% stake in the venture, continues to operate the casino and is renting the property from the venture for $245 million a year.

MGM last year sold its Circus Circus hotel and casino for $825 million to Phil Ruffin. Ruffin also owns the Treasure Island casino.

Shares of MGM were little changed at $33.36 Tuesday. Shares of Blackstone Group were also little changed at $58.44.