Investors bet big with $1.1B purchase of CityCenter mall

Two big retail investors made a bet Friday on a growing tourism market on the Strip.

In a widely rumored deal, Invesco Real Estate of Atlanta and Indianapolis-based Simon Property Group officially entered into a $1.1 billion agreement to buy The Shops at Crystals. The 324,000-square-foot luxury mall is part of CityCenter, which MGM Resorts International owns and operates through a 50-50 joint venture with Dubai World.

Local real estate brokers said the purchase is a vote of confidence in the resort corridor.

“Whenever you have someone like Invesco, which has some of the brightest financial minds in the world, pairing up with arguably the best mall operator in the world to make this kind of investment, they’re clearly bullish on the market,” said Matt Bear, a retail expert and vice president in the Global Gaming Group of commercial brokerage CBRE Las Vegas. “Investors don’t pay top dollar if they don’t think there’s growth — or at worst, stability. Two of the best in the business have chosen to invest more in Las Vegas.”

Simon already owns the Forum Shops at Caesars, as well as two local Premium Outlet Malls.

In Crystals, the company adds one of the Strip’s most exclusive malls to its 325-property portfolio. The retail complex, which opened in 2009, has 10 luxury flagships, including Louis Vuitton, Gucci, Dolce &Gabbana, Tom Ford, Prada, Fendi and Tiffany &Co. Among its other tenants are 30 unique-to-market luxury retailers such as Celine, Saint Laurent and Richard Mille.

“As great as the Forum Shops is, Crystals really does have a different shopper,” Bear said. “The Forum Shops is special because it’s high-end, but it does appeal to everyone. Crystals, by design, has the luxury shopper in mind. It’s a different customer profile, certainly more sophisticated, and with more disposable income. Crystals will be one of Simon’s top-tier properties around the globe.”

Simon executives called the shopping center a top-flight acquisition in an expanding market.

“The acquisition of The Shops at Crystals provides us with an extraordinary opportunity to obtain a high-quality asset in a growing marketplace,” said Chairman and CEO David Simon in a statement. “We look forward to perpetuating and building upon the successful foundation that CityCenter has created to further distinguish The Shops at Crystals as a leading retail destination.”

MGM Resorts Chairman and CEO Jim Murren called Invesco and Simon “the ideal stewards to maintain the high quality of the asset and usher in a new era of success.”

It’s also a smart deal for MGM Resorts, Bear said.

Operating shopping centers is not the hotel-casino company’s “core competency,” he said. Selling The Shops at Crystals frees capital to invest in its megaresorts.

“Marketing a mall, especially a mall like The Shops at Crystals, takes a very focused effort,” he said. “MGM has 75,000 hotel rooms they need to concentrate on. Simon can focus on a specific message for the Crystals shopper.”

Those shoppers can expect subtle changes at the mall. Likely moves include more mallwide promotions, plus a “hard look” at the tenant mix. Simon may experiment with new retailers in the center’s few empty spaces, Bear said.

“You will see changes, but all of them will be about getting clearer on the mall’s message, and continuing to make the shopping center unique and special,” he said.

The transaction is expected to close in the second quarter.

Analysts speculated widely on a potential sale earlier this month.

Deutsche Bank gaming analyst Carlo Santarelli was first to report the possible sale in a March 2 research note to investors. Santarelli said Streetaccounts, citing Real Estate Alert, had news of the transaction.

“Net-net, we think the transaction, if completed, is a distinct positive for MGM,” Santarelli said.

J.P. Morgan gaming analyst Joe Greff said he viewed Crystals as “a trophy asset” with a strong lineup of high-end tenants.

“We view the transaction as consistent with MGM’s stated intention to monetize assets, when attractive, and consider the multiple fair given the property is relatively new,” Greff said in his analysis.

Bear put it more simply: “Long-term, it’s a spectacular investment. It’s good real estate that’s getting better. It’s iconic real estate on one of the most important streets in the world.”

Shares of MGM Resorts closed Friday up 47 cents, or 2.24 percent, at $21.42 on the New York Stock Exchange.

Business Videos
Boulder City housing construction
Boulder City, population 15,970, limits its growth by putting a cap on residential construction. But Las Vegas builder Wayne Laska sees little competition and has launched a 127-home project there. His development, Boulder Hills Estates, will span about 30 acres and is the biggest new housing tract in the city in decades. Home prices start around $410,000. By comparison, the median sales price of newly built homes in the Las Vegas Valley last year was about $383,700.
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)
LVCVA/Boring Company Press Conference
The Las Vegas Convention and Visitors Authority announced a collaboration with Elon Musk's The Boring Company to develop and operate an autonomous people mover system for the Las Vegas Convention Center District.
International Pizza Expo includes green and gluten free
The International Pizza Expo at Las Vegas Convention Center included companies focused on vegan and gluten free, and plant-based pizza boxes. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
International Pizza Expo kicks off in Las Vegas
The first day of the International Pizza Expo at Las Vegas Convention Center is everything Pizza. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
T-Mobile program aids guests with sensory needs
A program at T-Mobile Arena is designed to provide a more sensory friendly experience for guests.
Photo Booth Expo
Danielle May talks about how Simple Booth transformed her Volkswagen bus into a business.
Nevada Gaming Commission's highest fines
The highest fines assessed by the Nevada Gaming Commission, according to commission Chairman Tony Alamo: 1) Wynn Resorts Ltd., $20 million, 2019 2) CG Technology (then known as Cantor G&W Holdings), $5.5 million, 2014 3) The Mirage, $5 million ($3 million fine, $2 million compensatory payment), 2003 4) Stardust, $3 million, 1985 5) Santa Fe Station, $2.2 million ($1.5 million fine, $700,000 compensatory payment), 2005 6) Las Vegas Sands, $2 million, 2016 7) CG Technology, $1.75 million, 2018 8) CG Technology, $1.5 million (also $25,000 in escrow for underpaid patrons), 2016 9) Caesars Entertainment, $1.5 million, 2015 10) Imperial Palace, $1.5 million, 1989 11) Peppermill Casinos, $1 million, 2014
Tiny Pipe Home vs Shipping Crate
A Tiny pipe home was displayed at the International Builders Show this week in Las Vegas.
Auto repair shortage affects Las Vegas
The auto repair industry is facing a national shortage of workers.
Franchising industry booming
Experts say Las Vegas is a hotbed for the franchise industry.
Africa Love owner talks about his store in Las Vegas
Mara Diakhate, owner of Africa Love, gift and decor store, talks about his store in Las Vegas. (Bizuayehu Tesfaye/ Las Vegas Review-Journal) @bizutesfaye
Developer gets approval to build homes at Bonnie Springs
The Clark County Planning Commission has approved a plan to build 20 homes on the site of Bonnie Springs Ranch. (Michael Quine/Las Vegas Review-Journal)
Dig This opens new location In Las Vegas
Remember when you were a kid and played with construction toys in the sand box? Dig This Las Vegas has the same idea, except instead of toy bulldozers, you get to play with the real thing. (Mat Luschek/Review-Journal)
Town Square developer Jim Stuart building again in Las Vegas
Las Vegas’ real estate bubble took developers on a wild ride, something Jim Stuart knows all too well. (Las Vegas Review-Journal)
Salon opens at Veterans Village
T.H.E. Salon, owned by Nicole Christie, celebrated their opening at the Veterans Village with a ribbon cutting ceremony.
Southwest Airlines considering Las Vegas-Hawaii flights
Southwest Airlines CEO Gary Kelly says the airline is "very focused" on Hawaii. Hawaiians have a strong presence in Las Vegas.The city’s unofficial status is “Hawaii’s ninth island.” In 2018, at least 2,958 people from Hawaii moved to Nevada. Of those, 88.7 percent moved into Clark County, according to driver license surrender data. According to the Las Vegas Convention and Visitors Authority, 310,249 people came to Las Vegas from Hawaii in 2018.
Fewer Nevadans are celebrating Valentine's Day
Fewer Nevadans are celebrating Valentine's Day. About 1.2 million Nevadans are expected to celebrate this year, a 5 percent drop from 2018. A growing number of people consider Valentine’s Day over-commercialized. Others weren’t interested in the holiday or had nobody to celebrate with. But spending is expected to rise. Those who do celebrate are buying for more people. The average American is expected to spend about $162 this year for Valentine’s Day, a 57 percent jump from a decade prior. Katherine Cullen, director of industry and consumer insights at NRF
Foreclosures of mansions in Las Vegas
Las Vegas was ground zero for America's foreclosure crisis after the housing bubble burst. (Eli Segall/Las Vegas Review-Journal)
Rick Helfenbein talks about the impact of tariffs on the clothing industry
MAGIC fashion convention showcases men's clothing trends
The MAGIC fashion convention has come to Las Vegas at the Mandalay Bay Convention Center to showcase some of the hottest clothing trends for men. (Nathan Asselin/Las Vegas Review-Journal)
Allegiant Air flight attendants learn how to handle a water landing
Field instructor Ashleigh Markel talks about training prospective flight attendants for Allegiant Air getting live training with a raft for a water landing at the Heritage Park Aquatic Complex in Henderson on Monday. (John Hornberg/Las Vegas Review-Journal)
Smith & Wollensky CEO Michael Feighery speaks
Smith & Wollensky CEO Michael Feighery speaks about the new Smith & Wollensky restaurant coming to the Grand Canal Shoppes at The Venetian in Las Vegas.
Smith & Wollensky CEO Michael Feighery speaks
Smith & Wollensky CEO Michael Feighery speaks about the new Smith & Wollensky restaurant coming to the Grand Canal Shoppes at The Venetian in Las Vegas.
Smith & Wollensky CEO Michael Feighery talks about Las Vegas return
Michael Feighery, CEO of Smith & Wollensky Restaurant Group, discusses the restaurant's upcoming return to the Las Vegas Strip.
Apartments to Come to Hughes Center
Developer Eric Cohen discusses his current building project at the Hughes Center office park in Las Vegas, Thursday, Jan. 31, 2019. Caroline Brehman/Las Vegas Review-Journal
Stratosphere to rebrand to The STRAT
The Stratosphere, a 1,150-foot-tall property in Las Vegas will be renamed The STRAT Hotel, Casino and Skypod.
TOP NEWS
Home Front Page Footer Listing