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Blackstone Buys the Cosmopolitan Hotel in Las Vegas for $1.7 Billion

May 15, 2014 12:30 pm

Skift Take

Blackstone keeps betting on the hospitality industry’s real estate assets while brands seek to shed them.

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An advertising campaign from the Cosmopolitan Hotel. Cosmopolitan

Deutsche Bank AG agreed to sell the Cosmopolitan of Las Vegas hotel and casino to Blackstone Group LP for $1.73 billion in cash, ending a six-year money-losing venture into casino development.

“The bank is committed to reducing its noncore legacy positions in a capital-efficient manner which benefits shareholders,” Pius Sprenger, head of the German bank’s non- core operations unit, in a statement today.

Germany’s largest bank was seeking more than $2 billion and had attracted at least four possible bidders, a person familiar with the situation said last month. The person asked not to be identified because the information isn’t public. Two others said it may be valued closer to $1.5 billion. Deutsche Bank foreclosed on the property after developer Ian Bruce Eichner defaulted on a construction loan in January 2008, and has labeled it a temporary investment.

The resort’s revenue rose 9.6 percent to a record $653 million last year. It opened in December 2010. The two-tower complex that opens onto the Las Vegas Strip cost more than $3.9 billion to build and has never turned a profit.

With assistance from Christopher Palmeri in Los Angeles and Beth Jinks in New York.

To contact the reporter on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net. To contact the editors responsible for this story: Kara Wetzel at kwetzel@bloomberg.net Anthony Palazzo. 

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