FRANKFURT (Reuters) - Deutsche Bank (DBKGn.DE) has struck a deal to sell its casino complex in Las Vegas to buyout group Blackstone (BX.N) for $1.73 billion in cash, drawing a line under an unwanted investment that has weighed on its balance sheet for years.
The lender made a “small profit” from the sale of casino, called The Cosmopolitan, a spokesman said on Thursday. Deutsche struggled to sell the business and was forced to take heavy writedowns on the business.
The sale will have a positive impact on the bank’s capital ratio. Under the Basel III bank rules in their most stringent form Deutsche Bank’s core tier 1 capital ratio will improve by five basis points upon closing of the transaction, the bank said.
Deutsche Bank took over the 110,000 square-foot casino resort after the previous owner defaulted on a loan in 2008.
The Cosmopolitan - which has the slogan “Just the right amount of wrong” - has 1,325 slot machines, 121 table games and 2,960 hotel rooms, according to the resort’s annual report.
The construction of the casino cost a total of $3.9 billion and Deutsche Bank transferred the asset to its internal “bad bank” in 2012, after taking writedowns of 760 million euros on the asset.
The Cosmopolitan opened in December 2010, but made net losses of $440 million over its first four years of operation. Last year it saw revenues rise 9.5 percent to $652 million, while adjusted earnings before interest, taxes, depreciation, and amortization rose 56 percent to $103 million. The resort’s net loss decreased to $94.8 million from $106.6 million in 2012.
Last month, Australian casino operator Crown Resorts (CWN.AX) had been said to be preparing a $2 billion bid for Las Vegas complex, according to a media report.
Reporting by Arno Schuetze and Edward Taylor; Additional reporting by Alexander Hübner; Editing by Elaine Hardcastle