LAS VEGAS (FOX5) -- MGM Resorts announced Tuesday that its flagship resort MGM Grand and Mandalay Bay on the Las Vegas Strip will be sold for $4.6 billion.
This is the second major joint venture between MGM and Blackstone Real Estate Income Trust (BREIT) in the past three months. The purchase price for the MGM Grand resort alone was $2.5 billion.
The multi-billion-dollar deal represents a multiple of 15.75x rent, the company announced in a release. MGM Resorts expects to receive net cash proceeds of approximately $2.4 billion. The
Despite the real estate dealings, operations of the resorts will remain in-house and continue as normal, MGM Director of Corporate Media Relations Brian Ahern said Tuesday.
The net cash profit is valued at $8.2 billion, following last October's transactions with Bellagio and Circus Circus.
MGM announced its first joint venture with BREIT on Oct. 15, 2019, leasing the Bellagio, a Strip resort valued at $4.5 billion.
These leasing transactions are part of the company's "asset-light" growth strategy.
"These announcements represent a key milestone in executing the company's previously communicated asset-light strategy, one that enables a best-in-class balance sheet and strong free cash flow generation to provide MGM Resorts with meaningful strategic flexibility to create continued value for our shareholders," Jim Murren, Chairman and CEO of MGM Resorts said in a release. "As such, we remain determined to prudently pursue accretive opportunities related to our remaining owned real estate assets including MGM Springfield, our 50% stake in CityCenter and our 55% economic ownership in MGP (pro forma for the potential $1.4bn redemption). Our corporate objective remains crystal clear, we will continue to monetize our owned real estate assets, which facilitates our strong focus on returning capital to our shareholders, while also retaining significant flexibility to pursue our visible growth initiatives, including Japan and sports betting."
MGM Growth Properties LLC (MGP) will own 50.1% and BREIT will own 49.9% in the joint venture. MGP will lease both properties to MGM Resorts for an initial rent of $292 million, according to a release.
Blackstone President & COO Jon Gray called the transaction a reflection of "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."
The deal is slated to close in the first quarter of 2020.
In earnings calls late last year, MGM executives said this type of real estate strategy would "unlock value" across the company.
The Associated Press contributed to this story. A previous version of this story included an incorrect purchase total. This story has been updated.