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Cosmopolitan Sold To Blackstone!

May 15, 2014 at 12:29 PM | by | Comments (18)

After a long time on the market, The Cosmopolitan has been sold by Deutsche Bank to Blackstone for $1.73 billion... in cash!

Reuters reports "the lender made a small profit from the sale." Deutsche took ownership of the Cosmo after foreclosing on developer Bruce Eichner back in 2008 and has been trying to get rid of it (for the right price) ever since. The New York Times says The Cosmopolitan has never turned a profit.

The Cosmopolitan was purchased by a division of Blackstone, Blackstone Real Estate Partners VII. You may not be familiar with the Blackstone name, but you are familiar with the major hospitality brand already in its portfolio, Hilton.

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from Wiki

 As the largest alternative investment firm in the world, Blackstone specializes in private equity, credit and hedge fund investment strategies, as well as financial advisory services, such as mergers and acquisitions (M&A), restructurings and reorganizations, and private placements.

Blackstone's private equity business has been one of the largest investors in leveraged buyout transactions over the last decade, while its real estate business has actively acquired commercial real estate. Since its inception, Blackstone has completed investments in such notable companies as Hilton Worldwide, Equity Office Properties, Republic Services, AlliedBarton, United Biscuits, Freescale Semiconductor, Vivint and Travelport.

Long live Cosmo

Hopefully this is good news.  Cosmo is an awesome Casino. I swear it throws my wife into a trance every time we walk around it!

It has to...

...be an improvement to be under new management.  Don't get me wrong, Cosmo is my favorite hotel.  But the experience there is more often a bewildering array of inconsistency than it is a seamless happy experience.

$20 trick

I had a great experience there with the $20 trick at the check in with Bryce, a redhead guy. Awesome suite with balcony overlooking the Bellagio fountains... for 6 days!

They just

made improvments to Identy, maybe a new owner can help make it even better.

Future Hilton or Conrad

Keep in mind this was originally supposed to be a "Denizen" hotel, which was to be the Highest branch of the Hilton Family, but there were legal problems, so it never happened.. but this news is GREAT NEWS... I can't imagine Marriott having much longer under a corporation that owns Hilton.. also remember when the Las Vegas Hilton ended their franchise, that left Vegas without a Hilton... so this could be a perfect opportunity for a Hilton or Conrad managed hotel.  Finally have some REAL service to match the amazing hotel.

2.1 Billion?

It's pocket change to Blackstone. Their assets are in excess of 30 B, and the funds that they've put together and manage are probably 6 or 7 times that.

They are known as the company that bought at the top of the LBO bubble...they paid 25 Billion for Hilton , which was basically the last large LBO done. About three or 4 years they ended up writing off about 50 Percent of that.

It ended up going public in December. Blackstone still owns 75%, and based on the price, the company is worth 30 billion.

Talk about falling in crap and smelling like roses

Cosmo

The best part about this: It was NOT bought by Caesars. Thank God.

Blackstone also owns LaQuinta and Wyndham

And Super 8 and Days Inn fall under Wyndham.  So don't automatically assume it will go to Hilton.

I worked for Hilton Hotel Corporation when Blackstone bought it.  My job went to Manilla because they could get people to do it there for less than 10% of what we were being paid in the US.  I would never support any company owned by Blackstone.

Not sold to "Blackstone"

It was sold to Blackstone Real Estate Partners VII, a private equity real estate fund. Blackstone raised 14 billion from 250 investors for the fund.

Based on this kind of partnership, they are not a long term owner.

Identity...

...ironically is what Cosmo has struggled to establish over the years, I can't imagine Blackstone doing anything to mess with that. Sticking the Cosmo name under the Hilton or Wyndham umbrella would be a mistake in my opinion.

Cosmo has carved itself out a niche as the "hip, young, edgy" property on the strip, and I think that would be undermined if it was now known as the Hilton Cosmopolitan or some other such nonsense. I don't expect to see much change in the day-to-day operations or guest experience.

The Party's Over?

So the bank that foreclosed on the original Cosmo developer before it was even completed has failed to turn a profit.

It is probable they saw the losses as necessary in order to build the brand and client base, grow revenue and position the enterprise for a sale.

Blackstone is bound to initiate aggressive cost controls, scale back non-profitable facets of the resort and do whatever is necessary to generate positive cash flow.

I doubt they will change the name to Hilton, but the Hilton database will surely be marketed toward.

Will it stay the same Cosmo?  Just look at the way equity sponsor groups are running the Caesars properties and The Palms for a hint.

Not sold on Cosmo

I love the common areas of Cosmo but I have found the service to be lacking and the rooms are not top quality for the price. The rooms only have the balconies going for them to warrant the cost and the Bellagio has much to do with it!

Stability

The fact the Cosmo is now owned buy a hotel company and not a bank is good news. But now that they own the hotel there will be cost cutting. they did not buy to lose money. The other issue is will they sign a contract with the union?. If they stay non-union look for for labor problems

Not a hotel company

Hilton is owned by Blackstone Partners. Cosmo is now owned by Blackstone Real Estate Partners VII, a Real Estate fund.  The fund was set up and is managed by Blackstone, but the assets aren't fungible.

So...

...what is Blackstone's most likely move to manage it, then? Wouldn't it make sense to have a hotel chain that is already under its umbrella run the property? I'm sure they didn't buy it just to sell it off to some other hotel entity, they have to have a plan for operating it...Hilton is the logical choice.

IMHO

They'll hire a gaming company to run it. Since they LBOd Hilton, they've gotten it out of gaming...thinking maybe Penn's gaming half? Hopefully not CZR...they screw up everything

BTW, according to the press release when the closed the fund, the largest category of investors is public employee pension funds.

great property

got it at a great price they shouldnt feel bad about not making a profit no strip casino has made one in over 6 years.....

great location, got it at a great price will prob sell it for a profit as well

hmmmmm wanna be different drop room rates to 100 no resort fee to differentiate yourself pretty much guarantees all rooms will be sold out that 300K a day coming in just off rooms plus now your packed everyday for money to spill elsewhere on the prop

lets go cosmo

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