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New York firms betting billions on Strip real estate

You won’t see their names on Las Vegas Boulevard marquees, and you may not have even heard of them.

But two heavyweight firms, Vici Properties and The Blackstone Group, are emerging as two of the biggest players on the Strip.

Their role? Collecting rent.

Vici, a Caesars Entertainment spinoff, announced a $17.2 billion deal Wednesday to acquire MGM Resorts International spinoff MGM Growth Properties, giving Vici real estate ownership of many of the biggest hotel-casinos on the Strip.

Blackstone has its own growing portfolio of hotels on Las Vegas Boulevard, and overall, the two companies are slated to own more than a dozen megaresorts combined along the famed casino corridor, mostly as landlords.

All this wheeling and dealing probably has little, if any, effect on guests at the properties or any immediate impact on the employees, other than changing where companies send their rent checks.

But the two New York firms are betting billions that tourism here will thrive — and that casino operators can pay a fortune in rent.

‘On time and in cash’

Vici, a casino landlord, and Blackstone, a financial conglomerate, are buying hotels as Las Vegas bounces back from the still-raging coronavirus outbreak, which dealt a catastrophic economic blow to Southern Nevada.

The pandemic temporarily turned the Strip into a ghost town of shuttered resorts last year, sparked huge job losses in the casino-heavy region, and kept people home and away from crowds for fear of getting infected, devastating the tourism industry.

The landlords’ line of business, however, seems to be fine.

Vici CEO Ed Pitoniak said on a conference call Wednesday that both MGM Growth and his company have collected “100 percent of our rent so far through COVID on time and in cash.”

Vici’s real estate holdings include Caesars Palace and Harrah’s Las Vegas. In early March, it also announced a deal with Apollo Global Management to purchase The Venetian, Palazzo and Sands Expo and Convention Center for about $6.25 billion from casino operator Las Vegas Sands Corp., with Vici acquiring the real estate and Apollo buying the operations side. The deal is expected to close early next year.

With its purchase of MGM Growth, Vici is buying several MGM Resorts-operated properties, including The Mirage, Park MGM, Luxor, New York-New York and Excalibur.

Betting billions

Blackstone not only dropped $1.73 billion in 2014 for The Cosmopolitan of Las Vegas, it also has a history of multibillion-dollar real estate deals with MGM Resorts.

As announced in early July, Blackstone is buying the Aria and Vdara hotels for nearly $3.9 billion and leasing them back to MGM. Blackstone also partnered with MGM Growth on a $4.6 billion deal early last year to acquire the MGM Grand and Mandalay Bay’s real estate and lease them back to MGM Resorts, with Vici saying this week it will retain MGM Growth’s stake in the venture.

Moreover, Blackstone bought the Bellagio in 2019 for about $4.2 billion from MGM Resorts and leased it back.

As you can imagine, leasing a resort with thousands of rooms is not cheap. The Bellagio sale, for instance, called for an initial annual rent of $245 million.

Las Vegas’ tourism industry has by no means fully recovered from the pandemic, and the public health crisis is far from over. But the local economy has come a long way since the early chaos of the outbreak, and Las Vegas is still a place where people spend big on hotels — not to mention gambling and booze.

“As much as parents like to spend money on their kids, whether in Orlando and other locations, I don’t think anybody’s ever spent $10,000 on a bottle of apple juice,” Pitoniak said this week.

The Review-Journal is owned by the family of Dr. Miriam Adelson, the majority shareholder of Las Vegas Sands Corp. Las Vegas Sands operates The Venetian, Palazzo and Sands Expo and Convention Center.

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

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