MGM sells Bellagio, Circus Circus resorts

MGM sells Bellagio, Circus Circus resorts

The Circus Circus hotel and casino is seen along the Las Vegas Strip. (Reuters photo)
The Circus Circus hotel and casino is seen along the Las Vegas Strip. (Reuters photo)

LOS ANGELES: MGM Resorts International, pressured by investors to unload its remaining company-owned casinos, agreed on Tuesday to sell the Bellagio resort in Las Vegas to Blackstone Group for $4.25 billion and will continue to operate the property under a lease arrangement.

The Las Vegas-based casino company also agreed to sell the Circus Circus property on the Strip, along with 47 adjoining acres, to real estate mogul Phil Ruffin for $825 million.

With the sales, MGM Resorts moves a step closer to becoming a landless casino company, marking a new era for the largest operator of casinos on the Las Vegas Strip.

When all of its deals close, the company will have just two wholly-owned properties, including the flagship MGM Grand, remaining under its ownership.

"The casino industry is evolving and we figured the best use of our intellectual capital was to focus on sports, live entertainment and reduce leverage," Jim Murren, MGM's chairman and chief executive officer, said in an interview. "It's very historic for a variety of reasons."

MGM has been restructuring under pressure from activist investors. The company has cut and reorganised management, and previously sold all but four of its wholly-owned casinos to MGM Growth Properties Inc, a real estate investment trust it created three years ago.

The REIT has an option to buy the MGM Springfield in Massachusetts.

The price for Bellagio represents 17.3 times the initial annual rent of $245 million, MGM said.

Bloomberg News previously reported Blackstone was in talks to buy and lease back the Bellagio and MGM Grand. The property is being purchased by the Blackstone Real Estate Investment Trust.

MGM will use the proceeds to bolster its balance sheet and return capital to shareholders.

Murren said the transactions would help the company target new growth opportunities, including one of the new integrated resource licences in Japan and sports betting in the US.

"MGM has no plans to develop any more casinos in Las Vegas,'' he said. 

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