Blackstone Sells Realty Income a Stake in the Bellagio for $950M

Realty Income is acquiring a 21.9% stake in the Bellagio, the iconic Las Vegas hotel and resort, from Blackstone Real Estate Income Trust, paying about $950 million in common and preferred equity for its position. BREIT will retain a 73.1% indirect interest, and MGM Resorts International, which operates the casino and hotel, will retain a 5% interest.

Specifically, Realty Income is investing $300 million of common equity in a new joint venture that owns a 95% interest in the Bellagio’s real estate assets. The REIT will also invest $650 million to acquire a yield-bearing preferred equity interest in the joint venture. Realty Income’s common equity ownership interest will be subordinate to its $650 million preferred equity investment in the venture.

The Bellagio, situated at the center of the Las Vegas Strip, is subject to an existing triple net lease with approximately 26 years of remaining term. It features approximately 4,000 guestrooms and suites across two towers, 157,000 square feet of gaming space and 200,000 gross square feet of state-of-the-art meeting and event facilities. Located on a 77-acre campus, the resort also includes the iconic Fountains of Bellagio and multiple Michelin Star restaurants.

The transaction is Realty Income’s second investment in the gaming industry and “exemplifies the advantages of our size, scale and access to capital,” said Sumit Roy, Realty Income’s President and Chief Executive Officer.

“Credit Investments are a natural adjacency to our traditional business, allowing us to provide additional value to our clients while leveraging our core competencies in transaction sourcing and structuring, and real estate and credit underwriting and monitoring,” he said.

The transaction is expected to close in the fourth quarter of 2023 and is subject to customary closing conditions.

PJT Partners served as lead financial advisor to BREIT, and Citigroup Global Markets Inc., J.P. Morgan Securities LLC, SG Americas Securities, LLC, Desjardins Capital Markets, and Mizuho Securities USA LLC also served as financial advisors. Simpson Thacher & Bartlett LLP is acting as BREIT’s legal counsel.