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Blackstone Buys the Cosmopolitan, Jumping Into Las Vegas Gaming Market

Deutsche Bank (NYSE: DB  ) is finally exiting the Las Vegas gaming market it never wanted to be in in the first place. Six years after The Cosmopolitan's builder defaulted on loans, the Strip resort is being sold to a fund run by Blackstone Group (NYSE: BX  ) .

The deal values the resort at 17 times EBITDA, an incredible multiple considering Las Vegas' slow growth. It's also telling that MGM Resorts (NYSE: MGM  ) and Wynn Resorts (NASDAQ: WYNN  ) , which both have the balance sheets to buy the property, weren't at all interested. 

The question is whether Blackstone can unlock any value in the resort. Gaming specialist Travis Hoium examines this deal and what it means for Las Vegas in the video below. 

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  • Report this Comment On May 21, 2014, at 2:12 PM, spokanimal wrote:

    Pretty simple. MGM, Sands and Wynn want growth, and Blackstone is a value seeker. MGM, Sands and Wynn don't want more Vegas... in fact, MGM sold Treasure Island to Phil Ruffin for a mere $700 million during the height of the recession, and now just seeks to optimize what it currently has in Vegas, in non-gaming attractions, given that growth in gaming volumes in Vegas is a thing of the past.

    Blackstone bought Cosmo for the same reason that Carl Icahn bought Transocean, Travis. It's all about buying something of excellent value, that is currently challenged but has good potential, then patiently developing it into something more valuable, and then selling it.

    That is a WAY different goal than gaming companies' desire to grow in Asia, and just do the best they can in Vegas, knowing that "full legitimacy" in Asia means having a major, 4-star-plus presence in Las Vegas.

    In fact, in today's America, with it's highest-in-the-world corporate taxes, just about EVERYTHING here has to do with "just doing the best you can without growing significantly"...

    ... and that goes a long way to understanding why the stock market, and all it's "multinational companies" are doing quite well, while U.S. GDP struggles along at the lowest, post-recession, rate of growth since World War 2... ~ 2.0%.


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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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