83°F
weather icon Clear

Cosmopolitan may be for sale on Las Vegas Strip

Updated April 17, 2019 - 6:50 pm

The company that owns The Cosmopolitan of Las Vegas has retained two investment banks to explore the possible sale of the 3,000-room Strip resort.

The Blackstone Group LP, a major player in the Southern Nevada real estate market, has retained Deutsche Bank AG and PJT Partners Inc. to explore strategic alternatives for the property, including a sale, according to sources familiar with the deal.

Chad Beynon, an analyst with Macquarie Research, told the Review-Journal The Cosmopolitan could sell for as high as 13 times its cash flow — which is more than $300 million — implying a price tag of $4 billion.

The property would be the first major operating casino on the Strip to go on the market in more than a decade.

Representatives of Blackstone and Wynn Resorts Ltd. — identified as a potential suitor for the property — declined comment on the reports.

Others identified MGM Resorts International as a potential buyer because the property lies between two MGM developments, Bellagio and CityCenter.

A spokesman for MGM Resorts could not be reached for comment Wednesday.

Limited buyers

Las Vegas real estate expert John Knott, executive vice president and the head of the Global Gaming Group at CBRE, but not a party to the sale, said there’s not a broad list of companies that could qualify for such a purchase. “You have to have the financial qualifications to perform before they even let you enter the process,” Knott said. “There probably will be a lot of wannabes that reach out to them that could create some noise. But there are others that want to be on the Strip, like Penn National or Boyd (Gaming Corp.), and MGM could have a strategic interest in it because it’s between their properties.”

John DeCree, an analyst at Las Vegas-based Union Gaming, said MGM Resorts, Wynn Resorts and Penn National could be potential buyers.

A spokesman for for Penn National could not be reached for comment. A spokesman for Boyd Gaming declined to comment.

MGM could team up with MGP, its real estate investment trust, while Penn could partner with Gaming and Leisure Properties, its REIT partner, to buy the property, DeCree said.

The Cosmopolitan sits betweenMGM Resorts luxury properties Bellagio and Aria, so it makes sense that MGM would look at it, Beynon said.

However, MGM has promised investors it would reduce leverage in the coming years. MGM could sell a property like The Mirage or Mandalay Bay to help finance the purchase of The Cosmopolitan, Beynon said.

Another potential buyer with financial wherewithal could be the Genting Group of Malaysia, which is building Resorts World Las Vegas about a mile north on the Strip.

Genting Group could not be reached for comment.

Private equity firms as well as foreign operators, including Australia’s Crown Resorts and Asia-based Galaxy Entertainment and Melco Resorts could be potential buyers, the analysts said.

Blackstone big in Las Vegas

Led by billionaire Stephen Schwarzman, Blackstone is no stranger to Las Vegas real estate. It bought hundreds of homes to turn into rentals after the market crashed in 2007. It also bought the 68-acre Hughes Center office park for $347 million in 2013, and downtown’s massive furniture-showroom hall, the 5.4 million-square-foot World Market Center, for an undisclosed sum last year.

The New York investment giant has acquired at least nine local apartment complexes since spring 2017 for $616 million total, Clark County records show. The most recent deal came June 6, when, according to the seller, Blackstone and a San Diego firm bought Solis at Flamingo, a 1980s-era property across from a foreclosed strip mall in the eastern Las Vegas Valley.

They paid $72 million — more than $20 million above what the seller paid just three years ago.

A flurry of potential Strip property transactions have had the gaming industry buzzing for days.

Las Vegas-based Caesars Entertainment Corp., in the midst of a corporate takeover by billionaire financier Carl Icahn, has been the subject of sales speculation with potential buyers Eldorado Resorts of Reno and Houston-based Landry’s Inc. waiting in the wings.

Icahn leveraged the hiring of a new CEO, Anthony Rodio, on Monday, fueling speculation that Icahn is calling the shots for the company. It’s unclear whether he wants to broker a sale or reform the company’s operation.

Blackstone acquired The Cosmopolitan in 2014 for $1.73 billion and invested $500 million to finish 21 large suites on the top four floors of one tower targeted for high rollers. It also renovated other rooms enabling the resort to command among the highest average daily room rates on the Strip, exceeding $300 a night. The company also added 18 new bars and restaurants in an effort to appeal to a younger crowd.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter. Review-Journal staff writers Todd Prince and Eli Segall contributed to this report.

Don't miss the big stories. Like us on Facebook.
Business Videos
How much do Las Vegas casino CEOs make?
Las Vegas gaming CEOs made anywhere between $1 million and $24 million last year, according to company filings with the U.S. Securities and Exchange Commission. ((Las Vegas Review-Journal)
30-year-old Rio needs a little TLC
Nearly 30 years after the Rio opened, the red and blue jewel that helped catapult Las Vegas to a new level with its buffet and nightclub has lost its status along with its shine.
The latest on the Drew Las Vegas - VIDEO
Eli Segall recounts his tour of the Drew Las Vegas, formerly the Fontainebleau, on the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
Pinball Hall of Fame to move near south Strip
Operators of the Pinball Hall of Fame have been approved to build a new, larger arcade near the south edge of the Strip on Las Vegas Boulevard near Russel Road. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
National Hardware Show underway Las Vegas
The National Hardware Show kicked off Tuesday at the Las Vegas Convention Center (Mat Luschek / Review-Journal)
Caesars for sale?
Caesars Entertainment Corp. has been swept up in takeover speculation since the company’s share price tumbled last year amid disappointing earnings and concerns over a recession. Amid the decline, hedge funds scooped up shares. Billionaire activist investor Carl Icahn began buying shares of Caesars as early as January. Icahn acquired nearly 18 percent by mid-March. In February Icahn called on the Caesars board to study a sale as a way to boost shareholder value.
Las Vegas home prices
Las Vegas home prices grew fastest among major markets in February for the ninth straight month. But amid affordability concerns, the growth rate has slowed down. Southern Nevada prices in February were up 9.7% from a year earlier, according to the latest S&P CoreLogic Case-Shiller index. The last time Las Vegas' price growth fell below 10% was in September 2017, S&P Dow Jones Indices reported.
Free Parking Coming To Wynn
Free parking will come to the Wynn and Encore resorts on May 1, 2019. (Mat Luschek / Review-Journal)
Founding Venetian employees talk about 20 years at the Strip resort
The Venetian, which opened May 3, 1999, is celebrating 20 years on the Las Vegas Strip. Seven original employees talk about opening the luxury resort and working there for two decades. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Circa aiming for December 2020 opening
The 1.25-million-square-foot property will have 44-stories and 777-rooms. It will also have a separate nine-story, 1,201-space parking garage.
Boxabl official explains the building concept
Boxabl business development manager Galiano Tiramani shows off a room built by his company. (Blake Apgar/Las Vegas Review-Journal)
TI/Mirage Tram reopens
The tram that shuttles guests between TI and Mirage reopened this week after being closed for much of 2018.
Las Vegas Convention Center expansion taking shape
Renderings and actual footage show how the Las Vegas Convention Center is evolving.
Former Starbucks CEO Howard Schultz at Las Vegas convention
Former Starbucks CEO and potential presidential candidate Howard Schultz spoke at the Epicor Insights user conference at Mandalay Bay Convention Center Wednesday, April 17, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Drew Las Vegas to open in the second quarter of 2022
The 67-story Drew Las Vegas is slated to open in the second quarter of 2022 at the north end of the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
NAB Day 1 (Time Lapse)
NAB kicked off at the Las Vegas Convention Center on Monday, April 8, 2019. (Mat Luschek / Review-Journal)
National Association of Broadcasters Show shows 1mm thick 8K TV with 22.2 channel digital sound
Japan’s NHK Science & Technology Research Laboratories booth featured a 1mm thick 8K TV system used in conjunction with a 22.2 channel digital sound system at the National Association of Broadcasters Show at the Las Vegas Convention Center. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Nevada shoppers react to Smith’s no longer accepting Visa credit cards
On March 1, Smith’s announced that it would no longer be accepting Visa credit cards at any of its 142 supermarkets, including the 45 in Nevada.
Massachusetts Gaming Commission asks how long Wynn executives knew about misconduct
Business reporter Rick Velotta gives an update on the adjudicatory hearing on the suitability of Wynn Resorts to retain its gaming license in Massachusetts.
Henderson app developer part of Startup in Residence
Henderson based developers of the app On Point Barricade are taking part in Startup in Residence, a North America program dedicated to pairing tech companies with governments. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Sam's Town employees and customers talk of their love for the iconic casino
Longtime Sam's Town employees and customers love each other and love their casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Las Vegas apartments rents
Las Vegas’ apartment market has accelerated in recent years. Developers are packing the suburbs with projects, landlords are on a buying spree, and tenants have filled buildings.
William Boyd talks about the birth of Sam's Town
On the eve of the 40th anniversary of Sam's Town, William Boyd, executive chairman of Boyd Gaming and son of hotel namesake Sam Boyd, talks about how the casino became one of the first local properties in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
High Roller observation wheel turns five
The world’s tallest observation wheel celebrates it’s fifth year on Sunday, March 31, 2019. (Michael Quine/Las Vegas Review-Journal) @Vegas88s
Escape Room Industry Growing In Las Vegas
Escapology employees discuss the growing escape room industry in the U.S. and Las Vegas. (Bailey Schulz/Las Vegas Review-Journal)
Impact of parking fees on visiting the Las Vegas Strip
There are no data showing a relationship between Strip resort and parking fees and the number of out-of-state visitors to Las Vegas. But there are data showing a relationship between Strip parking fees and the number of local visitors to the the Strip. ‘’As a local, I find myself picking hotels I visit for dinner or entertainment, based on whether they charge for parking or not,”’ said David Perisset, the owner of Exotics Racing. ‘’It is not a matter of money, more of principle.’’ A 2018 survey by the Las Vegas Global Economic Alliance found 36.9 percent of Clark County residents reported avoiding parking at Strip casinos that charge for parking. 29.1 percent reported avoiding using any services from a Strip casino that charges for parking.
MGM's sports betting deals
MGM Resorts International signed a sports betting sponsorship agreement with the NBA in July It was the first professional sports league to have official ties with a legal sports betting house. The deal came just two months after the U.S. Supreme Court overturned a law prohibiting sports betting in most states. In October, MGM became the first gaming company to sign a sports betting partnership with the NHL. In November, MGM became the first gaming company to sign a sports betting partnership with the MLB. Financial terms of Tuesday’s deal and earlier partnerships have not been announced.
Faraday puts Las Vegas land on the market
Nearly two years after Faraday Future bailed on its North Las Vegas auto factory, the company has put its land up for sale. (Michael Quine/Las Vegas Review-Journal)
El Cortez owner Kenny Epstein on running the iconic property
Kenny Epstein, owner of the El Cortez Hotel in downtown Las Vegas, talks about Jackie Gaughan mentorship and answers rumors about bodies in the basement at the mob-era casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
LVCVA recommends construction of underground people mover
The Las Vegas Convention and Visitors Authority announced the recommendation for an underground people mover for the convention center. The system would have the potential to expand and connect Downtown and the resort corridor all the way to McCarran. (Michael Quine/ Las Vegas Review-Journal)
THE LATEST