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Private-Equity Investment Giant Blackstone Doubles Down on Las Vegas

The private-equity and real-estate behemoth, Blackstone Group (BX), is doubling down on Las Vegas with the January 14, 2020 announcement that it will purchase the real estate assets of the MGM Grand and Mandalay Bay in a combined $4.6 billion deal. The MGM Grand Las Vegas includes a hotel and resort as well as three condominium towers. The deal is expected to be completed in the first quarter of 2020.

According to media reports, the deal is similar to Blackstone’s Oct. 2019 purchase of MGM Resorts’ flagship property, Bellagio, in which Blackstone’s private real-estate investment trust, BREIT,  takes control of the Bellagio through a $4.25 billion venture with MGM Resorts.

“Blackstone has been on a Las Vegas buying spree. The magnitude of its recent multi-billion deals within an astonishingly short time period signifies a bellwether moment for the city,” said Uri Vaknin, a partner with KRE Capital, whose company owns a collection of condominium towers in Las Vegas including Juhl, ONE Las Vegas and The Ogden, which recently sold out.

“As the world’s largest real estate investment powerhouse, Blackstone’s continued investment in Las Vegas signifies a level of confidence in the solidity of our long-term economic strength and will undoubtedly attract more premier investors in all sectors,” Vaknin added.

 

In 2017, Blackstone bought the 5.4 million-square-foot World Market Center in downtown Las Vegas for an undisclosed sum. It acquired the Cosmopolitan in 2014 from Deutsche Bank for $1.73 billion and bought the 68-acre Hughes Center for $347 million in 2013.

Blackstone entered the Las Vegas market in 2012 purchasing more than 3000 single-family homes in a buy-and-rent venture. Additionally, the company has invested hundreds of millions of dollars for apartment properties.

“Las Vegas is in an era of stability suggesting a regular long-term economic growth,” Vaknin said.

According to a Feb. 7, 2020 Las Vegas Review Journal article, the Las Vegas new home market got off to its hottest start in 13 years. “There continues to be demand in housing due to the strong population growth, continued employment growth and all of the major investments taking place in Southern Nevada,” said Brian Gordon of Applied Analysis.

Commenting on the strength of the condominium residential real estate market Vaknin notes that KRE’s downtown Las Vegas’ 275-residence condo community, The Ogden, sold out in January. The Ogden has been credited with the residential revitalization of downtown Las Vegas. Also located in downtown, the 344-residence Juhl community sold 12 condos in January, including its work/live offerings and a penthouse at $432 per-square-foot, a record for downtown since the downturn.

On the opposite end of Las Vegas Boulevard, at the One Las Vegas twin tower high-rise, nine condos sold in January, including several of its large three-bedroom residences.  Of note, they were sold almost exclusively to out-of-town buyers. According to Vaknin the company experienced an increase in cash-deals during January including six of the nine sales at ONE Las Vegas and four of the 12 deals at Juhl.

Further, Las Vegas continues to be an economic powerhouse. A world-class destination for hospitality, the city is now globally entrenched as “The City of Entertainment AND Sports.” The NFL Las Vegas Raiders will kick-off for the first time at Allegiant Stadium this fall and the NFL Draft will have its Las Vegas premier in April. The NHL Golden Knights continue to play to standing room only crowds and the Las Vegas Aviators AAA baseball team continues to be a homerun for locals and visitors alike. Not to mention the growing popularity of the WNBA Aces and Las Vegas pro soccer team, the Las Vegas Lights.”

Innovation and transportation will grab the limelight in 2020 as well. Virgin Trains USA will begin work on its $4.8 billion high-speed train between Las Vegas and Southern California including an expansive passenger terminal on South Las Vegas Blvd complete with retail. Additionally, Elon Musk’s innovative underground transportation system using Tesla cars beneath the Las Vegas Convention Center is well on its way to fruition, making Las Vegas the only destination to offer an underground transportation solution for moving visitors throughout a convention center.