Blackstone Grabs Las Vegas' Cosmopolitan for $1.73B

Deutsche Bank has struck a deal to sell The Cosmopolitan of Las Vegas resort and casino to Blackstone Real Estate Partners VII for $1.7 billion, which will be paid in cash. Deutsche Bank invested $4 billion in the resort it acquired after picking up the foreclosed property following the previous owner's default on a construction loan in 2008. The sale represents one of the biggest losses on a single project that Las Vegas has ever seen. A Deutsche Bank spokesman declined to specify the loss from the Cosmopolitan in a Wall Street Journal article, but the bank has reported €6.9 billion ($9.5 billion) in losses from noncore assets since 2012.

"The bank is committed to reducing its non-core legacy positions in a capital-efficient manner which benefits shareholders," Pius Sprenger, head of the Frankfurt-based lender's non-core operations unit, said in a statement today. The division is selling and winding down assets that Deutsche Bank doesn't consider to be central to its business. The Cosmopolitan opened in December 2010, but made net losses of $440 million over its first four years of operation. Other bidders for the property included Crown and a joint venture of TPG Capital, Apollo Global Management and Caesars Entertainment, according to people familiar with the bidding process.

"As a significant investor in the hospitality sector, Blackstone recognizes the value and potential in The Cosmopolitan as well as Las Vegas itself," said Tyler Henritze, senior managing director of Blackstone's real estate group. "This marks the beginning of the next chapter for The Cosmopolitan of Las Vegas, and the thousands of dedicated CoStars (i.e. employees of the property) who are committed to providing a compelling guest experience."

Blackstone's acquisition of the Cosmopolitan "speaks to a historically smart real-estate buyer making a statement on the length of the Las Vegas Strip recovery," said J.P. Morgan casino analyst Joe Greff in a report Thursday.

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Anglo Irish Bank Sells $9.5B US Loans

Wells Fargo & Co, JPMorgan Chase & Co and Lone Star Funds were the winning bidders on the $9.5 billion pool of U.S. commercial real estate loan sold by Anglo Irish Bank Corp. with debt related to some 250 properties, including marquee names ranging from the Apthorp, a landmark Manhattan residential building, to a Beverly Hills, Calif., shopping center to the Palmer House Hilton in Chicago according to a Wall Street Journal article. Other bidders included Blackstone Group LP, TPG Capital, Starwood Capital Group, Goldman Sachs Group Inc. and Deutsche Bank AG. The sale marks one of the biggest since the downturn in U.S. commercial real estate four years ago.

Anglo Irish Bank had been looking to unload the portfolio since the Irish government took control of the bank in January 2009. The bank had reported last week that it lost €101 million in the six months ended June 30th, far below the €8 billion loss it recorded for the same period last year.

According to Bloomberg, the trio will take on the portfolio of $9.65 billion in U.S. loans. It wasn't disclosed what the consortium bid for the assets, though some speculate 80 cents on the dollar would be a good price. "If you're looking at quality assets in good, strong markets, I'd say 80 cents on the dollar sounds pretty reasonable," said Tom Craig, founder of TSC Realty Partners, a commercial-property broker in Seattle who wasn't involved in the sale. "One of the barriers to entry on a big deal like this is how many people can put the capital together to buy this and close quickly."

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Palms Casino Resort Gets New Owners

Teaming with private investors, Palms Chairman George Maloof said that the Palms Casino Resort would be teaming with private investors Leonard Green & Partners LP and TPG Opportunities Partners. With the new partners, the Palms will "significantly reduce" the property's debt according to a Las Vegas Review-Journal article. TPG Opportunities Partners is a subsidiary of the Texas-based TPG Capital investment firm; Leonard Green & Partners is a private equity firm based in Los Angeles.

"We have an equity stake in the Palms," said Maloof in a phone interview with the newspaper. "We have a property that has done very well in a brutal market. I'm sure we've captured some market share from other people." The terms of the new arrangement were not disclosed, nor were figures revealed, though the property was backed by a $400 million revolving credit agreement that was due in October and was not refinanced.

Leonard Green and TPG said in a joint statement, "We are excited to partner with the Maloof family on this world-class asset and iconic brand."

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Taylor Wimpey Sells NA Holdings for $995M

Taylor Wimpey, operating as Taylor Morrison in the United States and Monarch in Canada, has agreed to sell its North American holdings to investment funds separately managed by TPG Capital and Oaktree Capital Management, as well as JH Investments for $995 million according to a San Francisco Chronicle article. Taylor Morrison CEO Sheryl Palmer would not disclose the ownership stake of each of the companies, but said collectively they will provide capital and expertise to maintain the company's profitability, which was accomplished in 2010 following the market turmoil of the last several years. The transaction is contingent upon shareholder approval in the UK and customary regulatory approvals, and is expected to close by the end of May 2011.

"We see this as a positive sign for the future of our business," said Morrison. "The commitment and tenacity of our team has helped pave the road for today's announcement." With homebuilding operations in Arizona, California, Colorado, Florida and Texas as well as in Canada, Palmer said the objective for the past year has been for all U.S. divisions to return to profitability, something she said was accomplished in 2010.

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