Realty Income Corporation and Blackstone Real Estate Income Trust, Inc. (BREIT) have announced their joint venture to acquire a 21.9% stake in the iconic Bellagio Las Vegas. The deal, which also includes the purchase of common and preferred equity interests from BREIT, will see Realty Income invest in the joint venture and become a minority owner of the property. BREIT will retain a majority stake of 73.1%, while MGM Resorts International will retain a 5.0% interest.
The Bellagio Las Vegas is a renowned resort located at the heart of the Las Vegas Strip. With approximately 4,000 guestrooms, 157,000 square feet of gaming space, and 200,000 gross square feet of state-of-the-art meeting and event facilities, the property is a popular destination for tourists and locals alike. It is also home to the iconic Fountains of Bellagio and a number of Michelin Star restaurants.
For Realty Income, this investment signifies its second venture into the gaming industry and demonstrates the company’s strategy of partnering with industry-leading operators to acquire high-quality real estate assets. The transaction highlights Realty Income’s size, scale, and access to capital, allowing it to invest in substantial real estate projects. The partnership with Blackstone showcases the demand for premium assets in the market.
Realty Income’s President and CEO expressed his satisfaction with the investment, emphasizing the advantages it brings. He stated that the company’s Credit Investment platform, which includes this preferred equity investment in the Bellagio joint venture, complements its traditional business model and enables Realty Income to offer added value to its clients. The company’s core competencies in transaction sourcing, structuring, and real estate and credit underwriting and monitoring will be leveraged in this endeavor.
The Head of Blackstone Real Estate Americas also shared his positive outlook on the transaction. He emphasized the investor demand for high-quality assets and highlighted the significance of The Bellagio as an iconic property on the Las Vegas Strip. The partnership with Realty Income represents a successful outcome for BREIT shareholders.
The existing Bellagio triple net lease agreement with MGM, which has approximately 26 years remaining, includes annual rent escalators and rent adjustments based on CPI. Realty Income’s common equity ownership will be subordinate to its preferred equity investment. The property also has property-level debt with an outstanding principal balance, a remaining tenor, and an all-in interest rate.
The deal is expected to close in the fourth quarter of 2023, subject to customary closing conditions. Additional information about the transaction can be found on Realty Income’s corporate website.
In conclusion, Realty Income’s partnership with Blackstone to acquire a stake in The Bellagio Las Vegas showcases the company’s strategy of investing in high-quality real estate assets. The joint venture allows Realty Income to expand its presence in the gaming industry while leveraging its core competencies and providing added value to clients. The transaction is expected to close later this year, pending the fulfillment of closing conditions.
