There is sure a lot of interest in hotel-gaming complexes this year, and it has resulted in a string of blockbuster deals that has resulted in an ownership switch for some of the best-known brands in this industry.
The latest is the sales of the Bellagio and Circus Circus facilities in Las Vegas by MGM Resorts for $5 billion. The busy Blackstone Real Estate Income Trust is snagging the Bellagio for $4.25 billion, while a group with Treasure Island Hotel and Casino owner Phil Ruffin is taking Circus Circus, $825 million.
The sale follows the pending acquisition of Caesars Entertainment Corp. by Eldorado Resorts for $17.3 billion. That transaction also involves major Las Vegas Strip assets, including Caesars Palace and Harrah’s. Last month Caesars made another large sale, divesting Rio All-Suite Hotel & Casino, just off the Strip, to Imperial Companies, for $516.3 million.
In the case of the 3,900-room Bellagio, Blackstone will own 95 percent of the property, while MGM would remain on to manage and lease the complex. This is not the first major Strip acquisition for Blackstone. In 2014, it bought The Cosmopolitan of Las Vegas hotel-casino for $1.7 billion, which is the Bellagio’s next-door neighbor.
These deals show a lot of faith in both the gaming industry and especially its health in Las Vegas.
If there is an economic downturn on the horizon, most experts don’t expect it to be nearly as devastating as the Great Recession a decade ago. When that occurred, visitor volume in Las Vegas reportedly dropped by 2.8 million people from 2007 to 2009, and unemployment in Nevada eventually hit 13.7 percent. It’s the kind of environment that led to Blackstone being able to purchase the Cosmopolitan for $1.7 billion when the development was valued at $3.9 billion when it was completed. A decade ago there were a bevy of unfinished projects scattered along the Strip.
Since then, the economy in Las Vegas, as well as the casino industry, has bounced back triumphantly. Last year nationwide spending on casino gaming hit a record $41.7 billion, according to the American Gaming Association. So, as bad as things were a decade ago, they ended up turning around with the overall economy.
Billion-dollar investments in these trophy casino-resorts is a statement that whatever happens to the overall economy, well-placed gaming properties are going to withstand the pressure in the long term.
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