Realty Income Corporation has announced an $800 million investment into the real estate of two prominent Las Vegas Strip properties, the ARIA Resort & Casino and Vdara Hotel & Spa. The deal involves a perpetual preferred equity investment in the assets, which are owned by funds affiliated with Blackstone Real Estate.
Under the terms of the agreement, Blackstone will maintain 100% of the common equity ownership of the properties. This transaction marks a significant expansion of the partnership between the two investment giants and has prompted Realty Income to increase its investment forecast for 2025.
Key Takeaways
- Realty Income is making an $800 million perpetual preferred equity investment in the real estate of CityCenter, which includes the ARIA and Vdara properties.
- Blackstone Real Estate will retain full common equity ownership, with MGM Resorts International continuing to operate the venues.
- Following the deal, Realty Income has raised its 2025 investment volume guidance to over $6.0 billion.
- The investment provides Realty Income with an initial unlevered rate of return of 7.4%, with built-in protections and future escalators.
Details of the Financial Agreement
The $800 million transaction is structured as a perpetual preferred equity investment, a financial instrument that blends features of debt and equity. This allows Blackstone to secure significant capital while preserving its complete ownership of the valuable Las Vegas assets.
For Realty Income, the deal is expected to generate an initial unlevered rate of return of 7.4%. The agreement includes terms for annual, capped rent escalators that will begin on the fifth anniversary of the deal's closing, providing a mechanism for future growth.
Investor Protections
The agreement includes several clauses to protect Realty Income's investment. If Blackstone chooses to redeem the preferred equity early, it will pay a premium: 3% if redeemed before the first anniversary, and 2% if redeemed between the first and fourth anniversaries. Additionally, a make-whole payment ensures Realty Income achieves an 8.325% unlevered internal rate of return (IRR) upon redemption.
Realty Income will also hold a right of first offer on any future sale of the common equity interests in the real estate by Blackstone. This strategic position could allow the company to acquire the properties outright in the future.
A Deepening Strategic Partnership
This investment is not the first collaboration between the two firms. It builds upon a previous successful joint venture involving the Bellagio Las Vegas, which was completed in 2023. The repeated partnership signals a strong working relationship between two major players in the commercial real estate market.
"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, President and Chief Executive Officer of Realty Income. "This represents an immediately accretive investment for Realty Income with a favorable initial yield and IRR profile, further demonstrating the value of our size, scale, and diversification."
Jacob Werner, Co-Head of Americas Acquisitions for Blackstone Real Estate, echoed the positive sentiment.
"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," Werner stated.
Impact on Realty Income's Outlook
The substantial investment has given Realty Income the confidence to revise its financial projections for the upcoming year. The company announced it is increasing its 2025 investment volume outlook to over $6.0 billion. This upward revision reflects an active investment pipeline and a strong capital position.
According to the company, the deal is part of an active fourth-quarter investment pipeline. Funding for these activities is secured through a combination of cash on hand, anticipated free cash flow, and unsettled forward equity. As of the end of the third quarter, Realty Income reported approximately $417 million in cash and around $1.3 billion in unsettled forward equity.
About the Properties
The ARIA Resort & Casino and Vdara Hotel & Spa are central fixtures of the Las Vegas Strip. Together, the properties feature approximately 5,500 rooms and 500,000 square feet of convention space. The facilities are operated by MGM Resorts International under a long-term triple net lease agreement. This lease has approximately 26 years remaining on its initial term, with three additional 10-year extension options available.
Market Context and Closing
The transaction highlights continued investor confidence in high-value Las Vegas real estate, particularly in assets with stable, long-term operational agreements. The properties are subject to an existing triple-net lease with MGM, which includes annual rent escalators and ensures that in-place rent is well-covered by the property's cash flows.
This structure provides a predictable income stream, which is attractive for an investor like Realty Income, known as "The Monthly Dividend Company®" for its focus on generating dependable dividends.
The deal is expected to be finalized quickly, with a target closing date of December 9, 2025, pending customary closing conditions. A team of financial advisors, including J.P. Morgan, Citi, and Goldman Sachs, advised Blackstone on the transaction.
