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Blackstone Sells 22% Stake in Bellagio to Realty Income

Bellagio hotel
The Bellagio hotel and casino. Photo: George Rose/Getty Images

Blackstone will sell a 22 percent stake in the Bellagio hotel in Las Vegas, in a deal that values the hotel at nearly $1 billion more than when Blackstone bought it in 2019.

The real estate investment trust (REIT) Realty Income agreed to buy the stake, which Blackstone has reportedly been shopping around for months, for $300 million, the Wall Street Journal first reported. As part of the deal, Realty Income will also drop $650 million in preferred equity interest into the new joint venture with Blackstone, according to both companies.

Las Vegas has recovered since the pandemic decimated the tourism industry, with visitor volume and spending up in 2022 and two new professional sports teams preparing to make Sin City their home, the WSJ reported. And the Bellagio’s value shows the strength of Las Vegas’ recovery.

Blackstone — through its REIT Blackstone Real Estate Income Trust (BREIT) — spent $4.25 billion to buy the Bellagio from MGM Resorts in 2019, and its latest deal with Realty Income values the 4,000-room hotel at $5.1 billion.

“Where you invest matters, and this transaction demonstrates the strong investor demand for the high-quality assets we have assembled within BREIT,” Nadeem Meghji, head of Blackstone Real Estate Americas, said in a statement.

Blackstone has bet big on Las Vegas, having roughly $20 billion of Las Vegas property in its portfolio as of March, and its gamble has been paying off in recent years. In 2021, the real estate giant sold The Cosmopolitan of Las Vegas to a group of investors, including MGM, for $5.65 billion seven years after it bought the hotel and casino for $1.8 billion.

And, at the end of 2022, it agreed to sell its 49.9 percent stake in the MGM Grand Las Vegas and Mandalay Bay hotels to Vici Properties at a $5.5 billion valuation, which reportedly generated a more than $700 million profit for Blackstone.

But not all of Blackstone’s Las Vegas bets have been wins. In March, the $325 million commercial mortgage-backed securities loan on Blackstone’s Hughes Center office campus hit special servicing after Blackstone provided a hardship letter stating its inability to fund future monthly payments.

Its Bellagio deal with Realty Income — which owns 13,100 properties primarily through net lease agreements — is scheduled to close in the fourth quarter of the year.

Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.

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Read the original story Blackstone Sells 22% Stake in Bellagio to Realty Income and others by Nicholas Rizzi at Commercial Observer.

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