MGM Growth Properties, BREIT Agree to Form $4.6 Billion Joint Venture

MGM Growth Properties LLC (NYSE: MGP) and Blackstone Real Estate Income Trust, Inc. (BREIT) said Jan. 14 that they have agreed to form a new joint venture to acquire the Las Vegas real estate assets of the MGM Grand and Mandalay Bay for $4.6 billion.

BREIT, a public non-listed REIT, will purchase $150 million in MGM Growth class A shares. MGM Growth will own 50.1% of the joint venture, and BREIT will own 49.9%.

At the deal’s closing, MGM Resorts International (NYSE: MGM) will enter into a long-term triple net master lease for both properties and provide a full corporate guarantee of rent payments. MGM Resorts will continue to manage, operate, and be responsible for all aspects of the properties on a day-to-day basis, with the joint venture owning the properties and receiving rent payments.

James Stewart, CEO of MGM Growth, said the partnership with BREIT illustrates the numerous opportunities available to grow the business and “emphasizes the strong institutional demand for gaming real estate assets.”

Blackstone President & COO Jon Gray said the transaction “reflects our continuing strong conviction in Las Vegas. We are pleased to once again partner with MGM Resorts, a world-class operator, as well as MGM Growth Properties.”

Tyler Henritze, head of U.S. acquisitions for Blackstone Real Estate, said that similar to the recent Bellagio deal, owning the Las Vegas assets under a long-term lease with MGM Resorts “provides stable cash flow and excellent downside protection for our BREIT investors.”