Mandalay Bay deal comes over 2 years after Las Vegas shooting

A little over two years ago, Mandalay Bay was at the center of a national tragedy.

Perched on the 32nd floor, a heavily armed gunman broke through two windows to shoot concertgoers across Las Vegas Boulevard, killing nearly 60 people and injuring hundreds more in the deadliest mass shooting in modern U.S. history.

In the days and weeks after the attack, business looked slow at Mandalay Bay, and hospitality experts contended the hotel-casino should not ditch its name, despite its link to the massacre.

Today, the towering, gold-colored property remains among MGM Resorts International’s biggest moneymakers on the Strip — and, we learned this week, is now part of a multibillion-dollar real estate sale.

New York financial giant The Blackstone Group announced Tuesday it agreed to form a joint venture to acquire the Mandalay Bay and MGM Grand’s real estate. The deal is expected to close this quarter.

MGM’s real estate investment trust, MGM Growth Properties, will own 50.1 percent of the venture and said the deal values the megaresorts at $4.6 billion. Blackstone, which has been on a real estate buying binge in Southern Nevada for years, will own 49.9 percent of the venture.

For local residents, and especially survivors of the shooting and victims’ family members, Mandalay Bay will always be linked to the Oct. 1, 2017 massacre at the Route 91 Harvest festival. But this week’s dual-hotel deal says more about MGM’s financial moves, and Blackstone’s voracious appetite for real estate, than it does about the shooting.

MGM Resorts, which will lease back the MGM Grand and Mandalay Bay and continue to operate them, has made big changes over the past year to bolster its balance sheet.

The casino operator eliminated more than 1,000 jobs, mostly in Las Vegas, last year as part of its “MGM 2020” cost-cutting plan. It also sold the Bellagio’s real estate to Blackstone for around $4.2 billion in cash a few months ago and leased it back, and sold Circus Circus and 37 acres of adjacent land for $825 million to Treasure Island owner Phil Ruffin.

Blackstone, led by billionaire Stephen Schwarzman, buys property around the world. In Las Vegas, it has picked up real estate across the valley since the economy imploded, including hotels, rental houses, apartment complexes and office buildings.

Its latest deal means it will be the landlord for MGM Resorts’ top three money-makers on the Strip. In 2018, Bellagio generated more than $405 million in operating income, highest among the company’s Las Vegas properties, followed by the MGM Grand at $304.6 million and Mandalay Bay at $174.3 million, a securities filing shows.

Of course, this being wheeler-dealer Las Vegas, Mandalay Bay is no stranger to big-money transactions.

In 2005, MGM Mirage, as MGM Resorts was previously known, completed its acquisition of the hotel’s former parent company, Mandalay Resort Group, in a deal valued at $7.9 billion.

As part of the sale, MGM acquired an employee parking lot across from the Luxor. Years later, the company turned the stretch of pavement into a fairgrounds — and the home of Route 91.

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