Blackstone fund sells 22% stake in Bellagio

Blackstone Real Estate Income Trust (BREIT) is cashing in some of its chips in The Bellagio Las Vegas with announced plans to sell a portion of its stake in the 4,000-room MGM Resorts property to REIT Realty Income, valuing the city stalwart at $5.1 billion.

Realty Income will pay about $950 million in common and preferred equity, generating cash for investors in the Blackstone property fund. It will invest ~$300 million of common equity in the joint venture to acquire a 21.9% indirect interest in the property and $650 million to acquire a yield-bearing preferred equity interest in the joint venture.

After the transaction, BREIT will hold a 73.1% indirect interest, and property operator MGM Resorts International will keep a 5% stake in the property.

Blackstone bought Bellagio from MGM Resorts for $4.25 billion in 2019.

The deal is expected to close in Q4 2023.

“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,” said Sumit Roy, Realty Income’s president and CEO. “We are pleased to initiate our Credit Investment platform through a preferred equity investment in the Bellagio joint venture. Credit Investments are a natural adjacency to our traditional business, allowing us to provide additional value to our clients while leveraging our core competencies in transaction sourcing and structuring, and real estate and credit underwriting and monitoring.”

Nadeem Meghji, head of Blackstone Real Estate Americas said, “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.”