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MGM Resorts completes sale-leaseback of Aria, Vdara

Updated September 28, 2021 - 9:13 pm

A day after it unveiled plans to operate The Cosmopolitan of Las Vegas, MGM Resorts International said it closed a sale-leaseback of two other towering hotels on the Strip — with the Cosmo’s seller, no less.

MGM announced Tuesday that it completed a $2 billion-plus buyout of its partner in the multi-tower CityCenter complex, giving the casino giant full ownership of the Aria and Vdara resorts, and that it closed its sale-leaseback of those properties with Blackstone.

The New York financial conglomerate purchased the hotels’ real estate for nearly $3.9 billion. As announced in July, MGM is leasing the properties back for an initial annual rent of $215 million.

MGM has sold multiple megaresorts on the Strip over the past few years to Blackstone and leased them back as part of its “asset-light” strategy of shedding ownership of its real estate.

With the closing of the Aria and Vdara deals, MGM has now sold off the remaining pieces of CityCenter, a 67-acre, bubble-era project that ran into steep problems as the economy crashed a decade or so ago but has now been purchased in chunks for mountains of money.

Its newest hotel landlord, Blackstone, just announced Monday that it’s selling the neighboring Cosmopolitan for $5.65 billion. As part of that deal, MGM is acquiring the Cosmopolitan’s operations side for more than $1.6 billion, while a trio of groups, including Blackstone, will own the real estate and collect rent from the new operator.

CityCenter, once pitched as a “self-contained city-within-a-city,” was an $8.5 billion project and has a cluster of gleaming skyscrapers.

It features the Aria hotel-casino; Vdara, a nongaming hotel; the Waldorf Astoria Las Vegas, a luxury high-rise with hotel and condo units; luxury mall Shops at Crystals; a 2-acre parcel next to the mall where the dismantled Harmon hotel once stood, and which is now slated for a retail project; and Veer Towers, two 37-story condo buildings that, by design, lean at 5-degree angles.

MGM Mirage, as MGM Resorts was previously known, unveiled plans for the then-called Project CityCenter in 2004. It announced in summer 2007 that government-owned holding company Dubai World was putting $2.7 billion into CityCenter for 50 percent ownership and would buy up to $2.4 billion worth of MGM stock.

However, the real estate bubble burst, and Las Vegas was ground zero for America’s financial wreckage.

At CityCenter, costs had climbed, construction defects in the unfinished Harmon hotel sparked a massive court battle, and CityCenter’s owners fought with each other. The project eventually opened in late 2009 amid a crashing economy.

In late 2012, when home prices were still a steep bargain compared to the mid-2000s, the developers sold 427 units at Veer Towers for $119 million in a bulk deal.

MGM and Dubai also sold Crystals in 2016 for about $1.1 billion, what’s now the Waldorf Astoria in 2018 for $214 million, and, in a deal that closed in June, the Harmon tower’s 2-acre footprint for about $80 million.

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.

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