Realty Income and BREIT sign $950m deal for Bellagio Las Vegas stake

Realty Income Corporation (Realty Income, NYSE: O), The Monthly Dividend Company, and Blackstone Real Estate Income Trust, Inc. (BREIT) have jointly announced a landmark deal. Realty Income has signed a definitive agreement to invest a whopping $950 million to acquire both common and preferred equity interests in a new joint venture. This venture owns a 95% interest in the iconic real estate assets of The Bellagio Las Vegas. Upon closing, Realty Income will invest around $300 million of common equity to acquire a 21.9% indirect interest in the Bellagio property. Meanwhile, BREIT will retain a 73.1% indirect interest and MGM Resorts International will hold onto a 5% interest.

Bellagio: A Crown Jewel with 4,000 Rooms and AAA Five Diamond Status

The Bellagio, an unmistakable jewel at the heart of the Las Vegas Strip, comes with an existing triple net lease featuring approximately 26 years of remaining term. Managed and maintained by MGM, the AAA Five Diamond Resort boasts around 4,000 guestrooms and suites, a massive 157,000 square feet of gaming space, and 200,000 gross square feet of state-of-the-art meeting and event facilities. The property sprawls across a 77-acre campus, complete with the iconic Fountains of Bellagio and several Michelin Star restaurants.

Realty Income CEO and BREIT Head Speak on the High-Value Transaction

Sumit Roy, Realty Income’s President and Chief Executive Officer, highlighted the company’s strategic focus. “Realty Income seeks to invest in high-quality real estate at scale in partnership with operators who are leaders in their respective industries,” Roy said. On the other side, Nadeem Meghji, Head of Blackstone Real Estate Americas, emphasized the asset’s high quality and the benefits for BREIT shareholders.

Terms and Closing Conditions: What to Expect Next

The existing Bellagio triple net lease with MGM includes annual rent escalators and property-level debt with an outstanding principal balance of approximately $3 billion. Realty Income’s common equity ownership will be subordinate to its $650 million preferred equity investment in the venture. The transaction is expected to close in the highly-anticipated fourth quarter of 2023, pending customary closing conditions.

This high-stakes real estate transaction between Realty Income and BREIT over The Bellagio Las Vegas serves as an exemplar in the industry, setting the stage for similar blockbuster deals. Stay tuned for further updates as both companies move toward closing the deal by the end of 2023.