MGM to Expand Las Vegas Resort Footprint with Operations Acquisition of The Cosmopolitan
September 28, 2021
MGM Resorts International has entered into a definitive agreement with New York-based private equity behemoth Blackstone Group to acquire the casino and hotel operating rights of The Cosmopolitan of Las Vegas for just over $1.6 billion.
Announced Sept. 27, the deal coincides with Blackstone’s sale of the 3,032-room Strip resort to a group of buyers for about $5.6 billion, nearly tripling its investment in the Strip property seven years after acquiring it from Deutsche Bank for just over $1.7 billion and spending $500 million on capital improvements.
According to Blackstone officials, a consortium comprising the Cherng Family Trust, Stonepeak Partners and Blackstone Real Estate Income Trust (BREIT) will pay approximately $4 billion to acquire the property’s real estate assets.
Following the transaction’s expected close in the first half of 2022, MGM Resorts will enter into a 30-year lease agreement with the group of buyers, including three 10-year renewal options, under which it 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 consumer price index increase (capped at 3%) after that.
Upon the sale’s completion, The Cosmopolitan will grow MGM’s massive footprint along the Strip, becoming its 14th Las Vegas casino resort alongside iconic properties including Mandalay Bay Resort and Casino; Bellagio; MGM Grand; ARIA Resort & Casino; Delano Las Vegas; Vdara Hotel & Spa; Luxor; Excalibur; New York-New York; The Signature at MGM Grand; NoMad Las Vegas; The Mirage and Park MGM.
“We are proud to add The Cosmopolitan, a luxury resort and casino on the Las Vegas Strip, to our portfolio,” said Bill Hornbuckle, president and CEO of MGM Resorts in a statement. “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.”
Opened in December 2010 at a price tag of about $4 billion, The Cosmopolitan features 3,032 rooms and suites that were renovated in December 2018, a 110,000-square-foot casino with high-end gaming areas; a 3,200-seat theater; Marquee nightclub and dayclub; 243,000 square feet of meeting space; 21,000 square feet of leased retail space; a 40,000-square-foot spa and fitness center; 26 food and beverage offerings, and a fourth-floor swimming pool overlooking Las Vegas Boulevard.
MGM Resorts CFO Jonathan Halkyard said he believes owning the operating rights of The Cosmopolitan offers the company an incredible opportunity to expand its customer base while providing a greater depth of choices for leisure and business visitors in Las Vegas.
“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,” Halkyard said.
While The Cosmopolitan was closed from mid-March to early June 2020 along with all other Nevada casinos due to the coronavirus pandemic, in the second quarter of 2021 the property generated $234 million in net revenue and $92 million in adjusted EBITDAR (earnings before interest, taxes, depreciation, amortization and rent costs).
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Partner Voices
MGM Resorts is committed to fostering an inclusive and diverse culture, not just among employees and guests but also within its supply chain. The company prioritizes procuring goods and services from businesses owned by minorities, women, veterans, people with disabilities, LGBTQ individuals and those facing economic disadvantages. This commitment is integral to MGM Resorts' global procurement strategy.
Through its voluntary supplier diversity program, MGM Resorts actively identifies and connects certified diverse-owned suppliers to opportunities within its supply chain. The company is on track to spend at least 15% of its biddable procurement with diverse-owned businesses by 2025, demonstrating that supplier diversity is not only a social responsibility but also a strategic business imperative.
Supplier diversity isn’t just the right thing to do – it’s good for business. A diverse supply chain allows access to a broader range of perspectives and experience, helping to drive innovation, entrepreneurship and resilience, while strengthening communities. At MGM Resorts, engaging diverse suppliers ensures best-in-class experiences for guests and clients. Supplier diversity ensures a more resilient supply chain while supporting economic development in the communities in which it operates.
The impact of MGM Resorts' supplier diversity initiatives is significant. In 2023, these efforts supported over 3,500 jobs across more than 30 states, contributed over $214 million in income for diverse-owned businesses and generated more than $62 million in tax revenue. The story extends beyond the numbers – it reflects the tangible benefits brought to small and diverse-owned businesses, fostering economic empowerment in their communities.
MGM Resorts also supports the development and business skills of diverse-owned businesses through investment, mentorship and education. Through the MGM Resorts Supplier Diversity Mentorship Program, the company identifies, mentors and develops diverse-owned businesses to fill its future pipeline, while providing businesses with tools and resources to empower and uplift. Since 2017, the program has successfully graduated 105 diverse-owned businesses and is on track to achieve its goal of 150 graduates by 2025.
MGM Resorts’ commitment to supplier diversity not only enhances its business operations but also plays a crucial role in uplifting communities and fostering economic development. This approach reinforces the idea that diversity is a powerful driver of innovation and resilience, benefiting both the company and the wider community.
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