Blackstone sells preferred equity stake in CityCenter to Realty Income

Investing.com -- Blackstone Inc. is selling a preferred equity stake in the CityCenter Las Vegas complex to Realty Income Corp. for $800 million while maintaining control of the property.

Under the agreement announced Monday, Realty Income will make an $800 million perpetual preferred equity investment in CityCenter, which includes the Aria Resort & Casino and Vdara Hotel & Spa. Blackstone Real Estate will retain 100% of the common equity ownership in the property, which MGM Resorts International will continue to operate.

The investment is expected to provide Realty Income an initial unlevered return rate of 7.4% with annual capped escalators beginning on the fifth anniversary of closing. The deal includes an early redemption premium of 3% if redeemed before the first anniversary, or 2% if redeemed between the first and fourth anniversaries.

Following this announcement, Realty Income has increased its 2025 investment volume outlook to over $6.0 billion. The transaction represents Realty Income’s second investment with Blackstone Real Estate, following their Bellagio Las Vegas joint venture completed in 2023.

"We are pleased to build on our strategic relationship with Blackstone Real Estate to invest in one of the Las Vegas Strip’s iconic properties," said Sumit Roy, Realty Income’s President and Chief Executive Officer.

Jacob Werner, Co-Head of Americas Acquisitions for Blackstone Real Estate, stated: "This preferred equity investment is a terrific outcome for our investors as it returns significant capital while preserving our ownership in a world-class resort at the heart of the Las Vegas Strip."

The property operates under an existing triple net lease with annual rent escalators and approximately 26 years remaining on the initial term, plus three 10-year extension options.

Located at the center of the Las Vegas Strip, the ARIA Resort & Casino and Vdara Hotel & Spa feature gaming, lodging, luxury retail and upscale dining space, with approximately 5,500 rooms and 500,000 square feet of convention space.

The transaction is expected to close on December 9, 2025, subject to customary closing conditions.

J.P. Morgan, Citi, Deutsche Bank, Goldman Sachs, and Evercore are acting as financial advisors to Blackstone, while Simpson Thacher & Bartlett LLP is serving as legal counsel. Latham & Watkins LLP is acting as legal counsel to Realty Income (NYSE:O).

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