VICI Properties has completed a $1.27bn deal to acquire the remaining 49.9% stock in the joint venture that owns MGM Grand Las Vegas and Mandalay Bay Resort.
The deal sees VICI pay its joint venture partners, Blackstone Real Estate Income Trust, a cash consideration of around $1.27bn, funding via cash in bank and proceeds from the settlement of forward equity sale agreements.
Both resorts are operated by MGM Resorts International and are subject to a triple net lease agreement which will remain unchanged until March 1. From the next rental escalation, MGM will pay an annual rental fee of $310m.
The triple net lease agreement has 27 years remaining on its term, which expires in 2050 but is subject to two ten-year renewal options.
Under this agreement, rental payments will increase by 2% per year through to 2035 and then 2% or the base rate of inflation for the rest of the term.
VICI Properties, a company specializing in casino property ownership, already owned 50.1% of the two Las Vegas Strip properties, agreed to pay $1.27bn to buy out its partners in December 2022 subject to closing conditions.
Announcing the deal last year, Edward Pitoniak, CEO of VICI Properties, said: “We have been honored to be BREIT’s partner in the MGM Grand Las Vegas / Mandalay Bay joint venture and this transaction further demonstrates the ability of Blackstone and VICI to work together productively, now and in the future.
“We’re excited to further our investment in MGM Grand Las Vegas and Mandalay Bay, two of the largest and highest-quality resorts in what we believe is the leisure and convention destination with the most compelling future demand outlook.
“This transaction also provides us with the opportunity to further grow our partnership with MGM Resorts International as they look to capitalize on the growing vitality of the South Strip.”
