Blackstone to Sell 22% Stake in Bellagio to Realty Income in $950M Deal

Blackstone’s Real Estate Income Trust (BREIT) agreed to sell a 21.9% stake in The Bellagio Las Vegas to Realty Income, valuing the casino resort at $5.1 billion and allowing it to reap some benefits from Las Vegas’ post-pandemic recovery.

Realty Income has agreed to spend about $950 million on a new joint venture that controls 95% of The Bellagio’s real estate assets. The publicly traded REIT will invest about $300 million in common stock to buy the 21.9% interest in the property and $650 million in preferred equity to obtain a yield-bearing preferred equity interest in the joint venture.

BREIT will retain the remaining 73.1% indirect interest, and MGM Resorts International will retain a 5% interest in the property.

For the next six years, the existing Bellagio triple net lease agreement with MGM contains 2% annual rent escalators, the greater of 2% or CPI (capped at 3%) in years 7-16, and the greater of 2% or CPI (capped at 4%) in years 17-26.

The transaction is Realty Income’s first investment through its Credit Investments platform. “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,” said Realty Income President and CEO Sumit Roy.

The deal is expected to close in the fourth quarter of 2023.

In 2019, Blackstone acquired MGM’s 95% ownership in The Bellagio, which was then valued at $4.25 billion.

Shares of Realty Income declined 0.4% on Friday, while Blackstone stock edged slightly higher by 0.7%.