Realty Income Corporation has entered into a definitive agreement to make an $800 million perpetual preferred equity investment in the real estate assets of CityCenter in Las Vegas. The investment covers the ARIA Resort & Casino and Vdara Hotel & Spa, both owned by funds linked to Blackstone Real Estate. Blackstone will continue to hold all common equity in the properties, while MGM Resorts International will remain the operator.
This marks Realty Income’s second major partnership with Blackstone, following its joint venture in the Bellagio Las Vegas deal completed in 2023. Because of this new transaction, Realty Income has raised its 2025 investment outlook to more than $6 billion.
The preferred equity investment is set to deliver an initial 7.4% unlevered rate of return to Realty Income. Starting in year five, the return will include annual capped escalators. An early redemption premium applies if Blackstone chooses to redeem the preferred equity within the first four years. The premium is 3% within the first year and 2% from year one to year four.
If Realty Income does not achieve an 8.325% unlevered IRR at the time of redemption, it will receive a make-whole payment to meet that return threshold. The company will also receive a right of first offer if Blackstone sells any common equity in the future.
Sumit Roy, President and CEO of Realty Income, said:
"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."
He noted that the investment offers immediate accretion and aligns with the company's scale and diversification strategy. He added that the fourth-quarter investment pipeline is already fully funded through cash, expected free cash flow, and equity. Realty Income reported around $417 million in cash at the end of Q3 and about $1.3 billion of unsettled forward equity as of today.
Jacob Werner, Co-Head of Americas Acquisitions for Blackstone Real Estate, said:
"We are pleased to reach this agreement and grow our partnership with Realty Income. 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."
The CityCenter assets operate under an existing triple net lease with around 26 years left in its initial term. The lease also includes three optional 10-year extensions. Current rent obligations are well-covered by property cash flows.
Located on the Las Vegas Strip, ARIA and Vdara feature gaming, lodging, luxury retail, dining, and roughly 5,500 rooms. The site also includes 500,000 square feet of convention space. MGM Resorts International manages the day-to-day operations.
The transaction is expected to close on December 9, 2025, subject to standard closing conditions.
Financial advisors to Blackstone include J.P. Morgan, Citi, Deutsche Bank, Goldman Sachs, and Evercore. Simpson Thacher & Bartlett LLP represents Blackstone as legal counsel, while Latham & Watkins LLP advises Realty Income.
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