Via Financial Times

MGM Resorts has divested real estate assets worth $5bn, striking two deals that will see iconic Las Vegas properties pass to the Blackstone Group and to Donald Trump’s business partner in the gambling capital.

At the north end of the Strip, Circus Circus is to be sold for $825m to an affiliate of Treasure Island tycoon Phil Ruffin, who joined with Mr Trump to develop the Trump International, a non-casino hotel and condominium in Las Vegas.

Meanwhile, Stephen Schwarzman’s Blackstone Group is leading a $4.25bn deal to acquire real estate assets of the Bellagio Hotel and Casino, and lease them back to MGM for an initial rent of $245m a year. MGM will receive 5 per cent of the equity in the real estate joint venture. 

“As big believers in MGM Resorts and Las Vegas, we are thrilled to partner with MGM to acquire the Bellagio,” said Jon Gray, Blackstone’s president and chief operating officer.

Mr Ruffin said his relationship with MGM “goes back to my friendship with Kirk Kerkorian”, the billionaire who in 1969 built The International as Las Vegas’s largest hotel. He later went on to buy a film studio and to create, in the MGM Grand, the Las Vegas mega-resort that is the centrepiece of the modern group.

Earlier this month, MGM agreed to pay up to $800m to settle with survivors and family of victims killed in a 2017 mass shooting that was the deadliest on US soil. Stephen Paddock killed 58 people and injured more than 500 when he opened fire on revellers at an outdoor concert from the 32nd floor of MGM’s Mandalay Bay Hotel and Casino.

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The company announced a review of its real estate portfolio in January. Jim Murren, its chief executive, said the sales would help MGM “build a fortress balance sheet” while returning cash to shareholders. After accounting for transaction costs, the company expects to receive cash proceeds of $4.3bn from the two transactions.

The resorts group tapped PJT Partners and JPMorgan to assist with the sale of the Bellagio to Blackstone, while Morgan Stanley and CBRE advised on the Circus Circus sale.