Blackstone Inc (BX.N) will sell its 49.9% stake in the joint venture that owns the MGM Grand Las Vegas and Mandalay Bay resorts to co-owner VICI Properties Inc (VICI.N) for about $1.27 billion in cash, the companies said on Thursday.
The deal includes the assumption of Blackstone Real Estate Investment Trust’s (BREIT) existing property-level debt that has a principal balance of $3 billion.
The New York-based private equity firm is paring some real-estate investments as interest rates climb and turmoil brews in the housing market. The company was set to sell a $400 million stake in Indian REIT Embassy.
The stake sale in the two Las Vegas resorts will generate a profit of more than $700 million for Blackstone in less than three years, including rent from the operator, the Wall Street Journal, which first reported the deal said.
“The sale of these assets is an excellent outcome for our BREIT investors and enables us to further concentrate BREIT’s portfolio in its highest growth sectors, including logistics and rental housing,” said Scott Trebilco, Senior Managing Director of Blackstone Real Estate.
The company had been ramping up investments in the real estate sector until earlier this year. In July, the company drew commitments worth $24.1 billion for its latest real estate fund.
VICI Properties, which owns properties such as the Caesars Palace Las Vegas, MGM Grand and the Venetian Resort Las Vegas, expects the deal to be immediately add to adjusted funds from operations (AFFO) per share upon closing.
The sale is expected to be completed early in the first quarter of 2023.