Washington

BLACKSTONE is in advanced talks to buy and lease back the iconic Bellagio and MGM Grand Las Vegas casinos from MGM Resorts International, according to people with knowledge of the matter.

They have yet to agree on a transaction, and one may not be reached, said the people, who requested anonymity because the talks are private.

The terms of the potential deal could not be learned.

MGM Resorts has been exploring selling and leasing back the properties individually or bundled together. Property sales free up cash for casino companies to expand while letting them continue to manage their resorts.

The Las Vegas-based company in January formed an independent committee to evaluate ways to extract value from its real estate portfolio. Activist investor Starboard Value built a position in the company with plans to push for changes.

"A Blackstone deal to buy and lease back Bellagio and MGM Grand - in advanced talks - could raise US$6.5 billion to US$7 billion for a US$10 billion resort in Osaka, Japan, where MGM will vie for a licence," said Brian Egger, a Bloomberg Intelligence gaming analyst.

MGM Resorts expects to share the results of the review in early fall, its chief executive officer Jim Murren said in a conference call with analysts in July.

The Bellagio and MGM Grand Las Vegas are two of the crown jewels in MGM Resorts' portfolio of gaming resorts in the US and China.

Together, the properties have more than 10,000 rooms and about 315,000 square feet of casino space, according to the company's most recent annual report.

MGM Resorts could receive proceeds of up to US$4 billion selling the Bellagio and nearly US$3 billion from a sale of MGM Grand, analysts with Bloomberg Intelligence said in July.

Blackstone, a New York-based private equity firm, has built up a hefty war chest for real estate transactions.

Last week, it said it raised US$20.5 billion for its ninth real estate fund, topping the US$15.8 billion it raised for its predecessor vehicle.

The firm has a history in the gaming sector.

Its holdings include Spain's Cirsa Gaming, which it acquired last year for about US$1.8 billion, and the Cosmopolitan of Las Vegas, which it acquired in 2014 for US$1.7 billion. WP