Blackstone offloads Bellagio stake to Realty Income in $950m deal

Bellagio Resort & Casino MGM

Blackstone Real Estate Investment Trust is offloading a portion of Las Vegas’ Bellagio to Realty Income Corporation for $950m, in a transaction that values the property at approximately $5.1bn.

This will see the former acquire common and preferred equity interests from BREIT in a new joint venture that owns a 95 per cent interest in the real estate assets of the gaming facility.

According to the pair, Realty Income will invest $300m of common equity in the joint venture, subject to certain adjustments, to acquire a 21.9 per cent indirect interest in the property. Blackstone will retain 73.1 per cent, while MGM will keep hold of its five per cent share.

Furthermore, the group will also spend $650m to acquire a yield-bearing preferred equity interest in the joint venture. The transaction is expected to close in the fourth quarter of 2023, subject to customary closing conditions.

“Where you invest matters and this transaction demonstrates the strong investor demand for the high-quality assets we have assembled within BREIT,” stated Nadeem Meghji, Head of Blackstone Real Estate Americas.

“The Bellagio is an iconic property in the heart of the Las Vegas Strip and we look forward to our continued ownership of this asset, now in partnership with Realty Income. This partial sale represents another terrific outcome for BREIT shareholders.” 

Blackstone completed the $4.25bn acquisition of the real estate assets of the Bellagio from MGM in November 2019, however, it was revealed earlier in the year that the group was thinking of offloading a stake in the group.

In addition, last year Wynn Resorts confirmed the sale of the land and real estate assets of Encore Boston Harbor to Realty Income Corporation for $1.7bn.

“Realty Income seeks to invest in high-quality real estate at scale in partnership with operators who are leaders in their respective industries,” commented Sumit Roy, Realty Income’s President and Chief Executive Officer. 

“This transaction to acquire an interest in the Bellagio, an iconic property, represents our second investment in the gaming industry and exemplifies the advantages of our size, scale and access to capital. 

“We are pleased to initiate our credit investment platform through a preferred equity investment in the Bellagio joint venture. 

“Credit investments are a natural adjacency to our traditional business, allowing us to provide additional value to our clients while leveraging our core competencies in transaction sourcing and structuring, and real estate and credit underwriting and monitoring.”

The Bellagio features approximately 4,000 guestrooms and suites across two towers, 157,000 square feet of gaming space and 200,000 gross square feet of meeting and event facilities.