MGM Resorts closes purchase of Infinity World’s CityCentre interest

Copyright : Ken Wolter / 123RF Stock Photo

MGM Resorts International has closed its previously announced acquisition of Infinity World Development Corp‘s 50 per cent interest in CityCenter Holdings for $2.125bn.

The transaction, which was first detailed on July 1, 2021, represents an implied valuation of $5.8bn based on a $1.5bn net debt, after giving effect to a prior sale of a two-acre parcel of land. 

The strip where CityCenter is located is also home to Aria Resort & Casino and Vdara  Hotel and Spa, which the company has plans to monetise on.

Alongside the closing of the purchase, MGM Resorts and Blackstone have also closed the sale-leaseback agreement for the latter to acquire the real estate assets of Aria Resort & Casino and Vdara Hotel and Spa for $3.89bn.

MGM Resorts has subsequently leased the property from Blackstone and continues to manage, operate and be responsible for all aspects of the property on a day-to-day basis.

In connection with the closing of the transactions, the company has fully retired CityCenter’s debt. As of June 30, 2021, CityCenter had cash and cash equivalents of $307m and total debt of $1.73bn.

Bill Hornbuckle, CEO and president of MGM Resorts, previously said of the purchase: “CityCenter has consistently elevated the Las Vegas experience over the years, contributing to this vibrant city’s undeniable position as a top tourism and business destination. 

“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.”

Earlier this week, MGM Resorts entered into a definitive agreement with Blackstone to acquire the operations of The Cosmopolitan of Las Vegas for a cash consideration of $1.625bn, subject to customary working capital adjustments.

Following the close of the transaction, MGM entered into a 30-year lease agreement, with three 10-year renewal options, with a partnership among Stonepeak Partners, Cherng Family Trust and Blackstone Real Estate Income Trust, acquiring the real estate assets. 

MGM will pay an initial annual rent of $200m, escalating annually at two per cent for the first 15 years and the greater of two per cent or the CPI increase (capped at three per cent) thereafter.