Realty Income Corporation and Blackstone have teamed up to take ownership of one of the most famous casinos in Las Vegas.
Realty will invest around $950m (£753m) into Blackstone Real Estate Income Trust for a new joint venture that will own a majority stake (95%) in the real estate assets of the Bellagio.
The 360,000 sq ft, 4,000-bedroom Bellagio is situated on more than 77 acres at the centre of the Las Vegas Strip in Nevada. It has 26 years remaining on its lease and is operated and maintained by MGM. MGM holds a 5% stake in the property.
Realty president and chief executive Sumit Roy said: “Realty Income seeks to invest in high-quality real estate at scale in partnership with operators who are leaders in their respective industries. 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.”
Nadeem Meghji, head of Blackstone Real Estate Americas, added: “Where you invest matters and this transaction demonstrates the strong investor demand for the high-quality assets we have assembled within BREIT. 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.”
The existing Bellagio triple net lease structure with MGM includes 2% annual rent escalators for the next six years, the greater of 2% or CPI (capped at 3%) in the years 7-16, and the greater of 2% or CPI (capped at 4%) in years 17-26.
Around $3bn of debt is secured against the Bellagio, with 6.7 years remaining at a 3.67% interest rate.
The deal is expected to close in the fourth quarter of 2023.
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