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MGM Grand Las Vegas, Mandalay Bay sold in $4.6 billion lease-back deal

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MGM Grand Las Vegas and Mandalay Bay are being sold in a lease-back deal valued at almost $4.6 billion for the two properties.

MGM Resorts announced Tuesday that it would sell MGM Grand's real estate assets to a joint venture of MGM Growth Properties, a property holding company, and Blackstone Real Estate Income Trust.

In addition, the joint venture will buy Mandalay Bay's real estate properties, currently owned by MGM Growth Properties.

MGM Grand alone is being valued at almost $2.5 billion in the deal, according to a press release from MGM Resorts, while MGM Growth Properties says the two resorts are being sold for $4.6 billion combined.

Both Mandalay Bay and MGM Grand will be leased back to MGM Resorts, with an initial rent of $292 million. The deal is expected to be completed by the end of March.

MGM expects to get $2.4 billion in net cash, according to a press release, along with $85 million in operating partnership units for Growth Properties, which has also agreed to deliver cash of up to $1.4 billion for the partnership units MGM Resorts already owns.

MGM completed deals late last year to sell Circus Circus Las Vegas to Phil Ruffin and the Bellagio to Blackstone. Fully combined, all of these recent deals would total about $8.2 billion in a cash infusion for MGM Resorts.

"These announcements represent a key milestone in executing the company's previously communicated asset-light strategy, one that enables a best-in-class balance sheet and strong free cash flow generation to provide MGM Resorts with meaningful strategic flexibility to create continued value for our shareholders," CEO Jim Murren said in a press release.

Murren previously teased the idea of selling MGM Grand in a lease-back agreement when speaking with analysts last year, comparing it to the one struck for the Bellagio.

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MGM will still explore other potential deals with its real estate holdings, which include MGM Springfield in Massachusetts and its 50% stake in CityCenter, according to Murren.

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