
Late yesterday Bloomberg broke the news that Blackstone Inc. is shopping The Cosmopolitan of Las Vegas … for a $5 billion minimum price. What’s even more incredible is that apparently it has suckers, er, corporations already on the hook. Why is the asking price so absurd? Consider that the Cosmo was built for $3.9 billion back in 2010 and that Blackstone obtained it from Deutsche Bank for a fire-sale $1.7 billion. We’re talking some serious profiteering here, folks. (Ya ever hear of depreciation, Blackstone?) Consider also that the Cosmo has 3,027 rooms while $4 billion Aria has 4,000 and $4.3 billion Resorts World Las Vegas boasts 3,506. So Blackstone wants more money for a smaller property. They’ve got some nerve.
Even crazier is that Apollo Management, not yet having taken the $6.25 billion keys to Venelazzo, is already circling the Cosmo and that MGM Resorts International might splurge on the megaresort, perhaps with a view to augmenting CityCenter. Does Bill Hornbuckle light cigars with $100 bills? Between a $9 billion commitment to Osaka and a potential $5 billion-plus indulgence on the Cosmo, MGM hardly seems the epitome of carefully targeted investment. (Remember that the Japanese casino can only occupy 3% of the megaresort’s total square footage.) At Blackstone’s initial put, one would have to generate a near-impossible $600 million in annual cash flow to have a prayer of a 15% return on investment. In other words, it would have to be THE GREATEST GAMING JUGGERNAUT OF ALL TIME. And if you believe that, let me sell you this bridge in Brooklyn … Apollo may cover its ass by going halves with Vici Properties but we’re still talking a helluva heavy lift. Normally it would be cheaper to buy than build on the Strip but these are far-from-normal times.
Continue reading Cosmopolitan drinks its own bathwater



