Rumor of Cosmopolitan Las Vegas Sale Heats Up Again

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Posted on: Sep 3, 2021, 1:49 a.m.

Last update on: September 3, 2021, 3:38 a.m.

Apollo Global Management (NYSE: APO) and MGM Resorts International (NYSE: MGM) are reportedly interested in acquiring the Cosmopolitan on the Las Vegas Strip. Current owner Blackstone (NYSE: BX) is rumored to be buying the venue for at least $ 5 billion.

Cosmo Las Vegas
Rumors of a Cosmopolitan Las Vegas sale, seen above, are escalating. Apollo and MGM could be there. (Picture: KTNV)

A Bloomberg An article published earlier today identifies private equity giant Apollo and MGM as potential contenders for the Sin City plush asset. It happens several days later Vital Vegas reported that the gossip about a sale is escalating.

Almost two and a half years ago, reports of the integrated complex being put up for sale surfaced. They died out as Blackstone embarked on its own spree to buy real estate assets from the Strip and high-end casino real estate transactions declined after the onset of the coronavirus pandemic.

Blackstone acquired Cosmopolitan for $ 1.74 billion from Deutsche Bank in 2014 – a discount price, as the German bank shelled out $ 3.9 billion to build the site.

Making sense of cosmopolitan sales rumors

Apollo has neither confirmed nor denied interest in Cosmopolitan. But the private equity firm is a credible bidder for the property because it has concocted a range of gaming assets.

Earlier this year, Apollo partnered with VICI Properties (NYSE: VICI) to acquire the Venetian, Palazzo and Sands Convention Center from Las Vegas Sands (NYSE: LVS) for $ 6.25 billion. This year, the investment firm is seen as one of the prime contenders for William Hill’s international assets and was a contender for some sports betting operations in Australia. This all comes after Apollo bought a Canadian casino operator and an Italian sports betting company last year.

It is not immediately clear whether VICI will partner with Apollo on an offer for Cosmopolitan. But the real estate company has a penchant for transactions, as evidenced by the aforementioned transaction with Apollo and the recently announced $ 17.2 billion takeover of MGM Growth Properties (NYSE: MGP).

As for MGM, it’s already the largest operator on the Strip, and it remains to be seen whether the company wants to add to its home market portfolio. Already linked to other takeover speculation, operator Mirage has one of the strongest balance sheets in the industry, with more cash coming from the MGP deal and pending sales from Aria and Vdara.

On that note, MGM buying an asset from Blackstone would reverse the script previously written by the companies. Blackstone owns the Bellagio real estate assets, nearly half of the MGM Grand and Mandalay Bay real estate holdings, and is the purchaser of the Aria and Vdara properties,

In other words, Blackstone owns MGM or is expected to have a presence in multiple locations. Additionally, the advertised price of over $ 5 billion for Cosmopolitan implies that real estate is for sale, which is interesting as the private equity firm is building some sort of empire with the real estate assets of Strip.

Talk about other suitors

At $ 5 billion, the list of legitimate contenders for Cosmopolitan Las Vegas is short. But Strip’s top-notch properties are in high demand, and if the sale rumor is true, it could attract tire snags.

Golden Nugget owner Tilman Fertitta has long wanted a property on the Strip, and there is a lot of speculation to that effect. He’s in the process of going public with Fertitta Entertainment, which includes the five Golden Nugget casinos and Landry’s restaurant empire. It also just sold Golden Nugget Online Gaming to DraftKings for $ 1.56 billion in equity.

As part of this transaction, Fertitta has agreed to hold the DraftKings shares it receives for at least one year. This indicates that he would have to find capital elsewhere to fund a possible race for Cosmopolitan.

There has also been talk of Penn National Gaming (NASDAQ: PENN) entering the mix. Vital Vegas dubbed the regional games company a “dark horse” competitor for Cosmopolitan. Factoring in cash, Penn’s long-term liabilities stand at $ 9.93 billion, indicating that a $ 5 billion purchase might not be something shareholders and creditors alike. will be enthusiastic.

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