American casino operator MGM Resorts International is reportedly set to receive a cash infusion of about $4.2 billion after agreeing a deal to sell its Bellagio Las Vegas property to private equity firm Blackstone Group LP.

According to a Tuesday report from the Las Vegas Review-Journal newspaper, rumors of this sale first surfaced last month while its endorsement follows hard on the heels of a similar arrangement that saw MGM Resorts International offload its Circus Circus Las Vegas venue to an entity controlled by the man behind the nearby Treasure Island Las Vegas property.

Maintaining control:

The newspaper reported that this most recent lease-back deal from Las Vegas-headquartered MGM Resorts International is set to see the firm continue to manage operations inside the Bellagio Las Vegas, which is one of the most profitable casino properties in southern Nevada, in exchange for agreeing to pay a preliminary annual rent of $245 million. The 30-year arrangement is purportedly due to close before the end of the year and also contains a pair of decade-long extension clauses.

Change of focus:

MGM Resorts International reportedly told the Las Vegas Review-Journal that the understanding will allow it to reduce debt and ‘redeploy capital to higher-return investments’ such as its scheme to bring an integrated casino resort to the Japanese city of Osaka.

The operator purportedly stated that the deal is moreover part of a plan to become a ‘more nimble asset-light’ firm and will combine with the $825 million Circus Circus Las Vegas sale to permit it to ‘build a fortress balance sheet and return capital to shareholders’.

Opened in 1998, the Bellagio Las Vegas reportedly sits on a 77-acre plot of land along the southern end of the Las Vegas Strip and features a 155,000 sq ft casino alongside a complement of over 3,900 rooms. Debra DeShong from MGM Resorts International purportedly told the newspaper that there will be ‘no changes’ as a result of the sale and that employees and guests ‘should see no difference in their experience’.

“MGM Resorts International will continue to operate the resort as we do for other properties that have been sold into real estate trusts.”

Growing influence:

For its part, New York-based Blackstone Group LP is reportedly led by billionaire businessman Stephen Schwarzman and already has a considerable presence in the casino market of southern Nevada courtesy of its ownership of The Cosmopolitan of Las Vegas venue. The firm’s President and Chief Operating Officer, Jon Gray, purportedly told the newspaper that his company is a ‘big believer’ in Las Vegas and that the lease-back deal will result in MGM Resorts International retaining responsibility ‘for all aspects of the property on a day-to-day basis’ including any capital expenditures.

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