Blackstone Sells The Cosmopolitan of Las Vegas, Some Buyers Include Panda Express Family Office and Stonepeak

Posted on 09/27/2021


The Blackstone Group, through Blackstone Real Estate Partners VII L.P., sold the The Cosmopolitan of Las Vegas for US$ 5.65 billion. Blackstone appears to have made almost 10x on the equity it invested in the asset back in May 2014. Blackstone paid US$ 1.73 billion for The Cosmopolitan of Las Vegas from Deutsche Bank AG. Deutsche Bank spent about US$ 3.9 billion to build The Cosmopolitan, first as its lender and then as its owner after the project’s developer defaulted during the 2008 financial crisis. After the 2014 purchase, Blackstone implemented significant operational changes and invested over US$ 500 million into the property.

Realization
Blackstone Real Estate Partners VII determined that separating the asset’s operations from the underlying real estate would result in an optimal outcome. Under the agreement, MGM Resorts International intends to acquire the operations of The Cosmopolitan and sign a 30-year long-term net lease with a partnership between Cherng Family Trust, Stonepeak Partners, and Blackstone Real Estate Income Trust, Inc. (“BREIT”), which will acquire The Cosmopolitan’s real estate assets. MGM Resorts International is paying US$ 1.625 billion for the operations part of the The Cosmopolitan. MGM Resorts will pay an initial annual rent of US$ 200 million, escalating annually at 2% for the first 15 years and the greater of 2% or the CPI increase (capped at 3%) thereafter. Thus, the Cosmopolitan’s real estate assets are being sold for around US$ 4.025 billion.

The transaction is expected to close in early 2022, subject to regulatory approvals and other customary closing conditions.

Advisors
Deutsche Bank Securities Inc. and PJT Partners served as financial advisors to BREP. Simpson Thacher & Bartlett LLP served as legal counsel to BREP.

Latham & Watkins LLP served as legal counsel to the Cherng Family Trust and Stonepeak Partners.

Cherng Family Trust Office
Founded in 2005, the Cherng Family Trust Office is a single family office organization accountable for the administration, finances, investments, and charitable initiatives of Andrew & Peggy Cherng and their family. The family office derives its wealth from the Panda Express restaurant business.

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