The Cosmopolitan Hotel & Casino has finally been sold to a private equity fund managed by Blackstone. Today’s announcement marks the end of a nightmare investment for Deutsche Bank when it took control of the hotel/casino as a creditor during the last financial crisis. The sale also signals the potential for more deals on the Strip and in Las Vegas more generally. The Hard Rock Hotel & Casino is close to rolling over some debt and will provide the Las Vegas casino market with another valuation measurement.
Will the sale of the Cosmo provide an opportunity for Penn National Gaming? Is it possible that PENN will strike a deal with Blackstone to manage the Cosmo or even eventually roll the property into Gaming & Leisure? Its probably far fetched to think GLPI would be involved, but PENN has been rumored to be interested in gaining access to the LV Strip and this might be a perfect opportunity for PENN to do so without using much capital. A deal with PENN to operate the Cosmo might also be helpful to Blackstone as it’s not an experienced casino operator and does not have a player/guest data base to market into.
However The Cosmopolitan is managed going forward, the key focus should be on driving more gaming revenue, as this seems to be the missing link to the resort’s profitability.
