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WSJ - Blackstone Preparing to Sell Cosmopolitan Hotel

Discussion in 'Casino Industry & Development' started by donfairplay, Apr 17, 2019.

  1. donfairplay

    donfairplay High-Roller

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  2. luck.ofthe.draw

    luck.ofthe.draw VIP Whale

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    "Exploring a sale" - as said in other rumor threads, I won't believe it until I see it.

    Not to mention, TI is doing fine on their own, the Cosmo may remain stand alone as well.
     
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  3. Elizakess

    Elizakess Low-Roller

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    It’s not so much whether it stands alone as will a sale affect the players. Blackstone may be reacting to the slew of articles and analysts that say another recession is coming but also could be interested in an overseas property instead.
     
  4. HHFan

    HHFan Low-Roller

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    Blackstone doesn’t hold assets. As soon as they feel they can get the ROI they initially anticipated when they took the project on, they want out so they can move that cash elsewhere for another flip.

    The fact that the property has thrived, from a guest perspective, under Blackstone’s ownership still surprises me. The new owner/operator should keep that in mind, as it’s unlikely that Blackstone doesn’t already have the place running real lean so there would be very little fat left to cut.
     
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  5. VegasBJ

    VegasBJ VIP Whale

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    Cosmo has been for "sale" ever since Blackstone took it over. They buy and sell assets, that's their standard operating procedure! They are not a casino operator, or in the casino business, and the price is probably as high now as it's ever been. They turned the place around, hired the right team, and now want to get a great ROI. They have about $2.2b invested, and selling for $4b. That's what they do...........................
     
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  6. VegasBJ

    VegasBJ VIP Whale

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    the MGM rumors of buying Cosmo have been going around for a couple years now. It has to be a craw in MGM's ass that the Cosmo is basically sitting on their property lines.....................But, I don't see MGM buying it as they wouldn't know what to do with it............................
     
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  7. sinnerman

    sinnerman High-Roller

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    It will be really interesting to see what happens to this property. I can't see another independent fund buying this as a stand alone property. After all, they wont be able to do much with it that Blackstone hasn't. So then it comes down to the big chains, Boyd, stations, El Dorado, CET, MGM, Wynn, Sands etc. CET is exploring a sale themselves and I can't see how this brings a lot more value to MGM.

    Maybe Wynn or Sands will buy it and use it as a way to target the younger demographic.
     
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  8. VegasBJ

    VegasBJ VIP Whale

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    as to who buys it, the asking price is high for a 1 unit property. CZR's whole valuation is only $5.6b for ALL the properties. $4b is a lot of $$ just to add 1 unit to your portfolio. TI went for like $700m (IIRC). I think the asking price for RIO is around $350-$400m, just as a comparison. Palms was also sold for well under build price. I think the price is too high for most players. If you had $4b to spend, you could build from scratch, and build a much larger footprint. Cosmo's one negative drawback is the really small casino floor. hard to get back your $4b investment with that small of a casino floor.
     
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  9. sinnerman

    sinnerman High-Roller

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    They are asking $4B. They bought it for $1.7B and spent $500M on improvements since 2014. If they actually get that, it will be an 80% ROI for them over 5 years, very healthy. I agree with you, that's a pretty high asking price.
     
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  10. AyDee

    AyDee getting too old for this

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  11. Roccoscollar

    Roccoscollar High-Roller

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    This. Sell when market is high. They may not get $4 billion but they're going to print money from their investment.

    I have ZERO inside knowledge but I think an outsider will (not Caesars or MGM) will buy it.
     
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  12. FYMYAWF

    FYMYAWF It's not a bender, it's a lifestyle.

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    Blackstone seeds this story to business sites every 6 months or so to revive interest in the place. Believe it when I see it.

    I do appreciate that they've been a pretty good caretaker of the place, though. They have completed room renovations including the new penthouses, haven't let the food/bev offerings slip and have kept the service levels about the same since they took over. Hopefully if/when another group moves on it they will understand how special this place is and will continue to let it "do its thing".
     
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  13. hammie

    hammie VIP Whale

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    But the enterprise value of the company is around $24 B; Enterprise value factors in Market capitalization, cash, debt and other assets and liabilities. Plus, this doesn’t include the real estate for 19 CZR properties that were spun off into VICI, the real estate trust.
     
  14. sinnerman

    sinnerman High-Roller

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    That's an excellent point. CZR value is $5.6 billion only due to the $18 Billion in debt they have taken on. Presumably, Cosmo has no debt and it definitely doesn't have an REIT holding its real estate.

    I can see it being a good value add to Wynn or V/P if they are trying to target a younger demographic
     
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  15. woodsie

    woodsie VIP Whale

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    Valid point, and there are certainly parcels still available on the strip if your pockets are that deep.
     
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  16. mickyblueeyes

    mickyblueeyes Low-Roller

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    Anymore news on the Cosmo selling?
     
  17. Ruark

    Ruark Low-Roller

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    If Blackstone is just doing a $4b flip, what would the BUYER do with it? Flip it in a couple years for $8b??? I mean, jeez.
     
  18. nostresshere

    nostresshere Mr. Anti Debit Card

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    Yea... either of those could make it work and expand their "universe". MGM and CET need stronger competition.
     
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  19. willslotforcash

    willslotforcash Low-Roller

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    No, the buyer would operate it poorly, and sell it back to Blackstone for $900 million, and they would flip it again.
     
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  20. Multifarious5

    Multifarious5 VIP Whale

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    I do believe Blackstone loves to flip. But, Cosmo has done SO well, it's almost priced itself out of an easy sell.

    It's like the housing market. Low to mid-end homes have lots of buyers. When you start going beyond upper middle-class (tougher that low/class homes) you have a much smaller buyer pool.

    Jump into upper class homes?

    Hefty price tags but a much, much smaller buyers' pool.

    I know nothing about Corp real estate, but I think Cosmo has done so well, it's priced itself over the "comfort buy" for many buyers, even CET and MGM.

    I agree with others, if it sells, it may be an international, left-field company. Even then, the price tag is going to include higher risk (of dropping down in the wrong mgt.) yet offer lower reward, as it's already doing very, very well, so less room for growth.

    PS doesn't mention Cosmo, but this is food for thought on price tag versus ebitda, and how many years a "most profitable casino" would take to recoup the $4b price tag....

    https://www.fool.com/investing/2018/01/14/the-las-vegas-strips-most-profitable-resort.aspx

    If Wynn EBITDA is around 550 million a year, and Bellagio at 500ish million annually, thats a fair amount of years to recoup a 4b price tag.

    I see my raspberry lemon drops coming for awhile... :)
     
    Last edited: May 28, 2019
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