Investment in Preferred Equity

12 Months Ended

Dec. 31, 2025

Investments in Unconsolidated Entities

The following is a summary of our investments in unconsolidated entities for the periods indicated below (dollars in thousands):


	Ownership %	Number of Properties	Carrying Amount (1) of Investment as of				Equity in earnings of unconsolidated entities
							Years ended December 31,
	As of December 31, 2025		December 31, 2025		December 31, 2024		2025		2024		2023
Data Center Joint Venture	80.0%	2	$	293,073	$	299,165	$	11,310	$	6,940	$	—
Bellagio Las Vegas Joint Venture - Common Equity Interest	21.9%	1	253,625		274,057		2,026		(980)		2,139
Bellagio Las Vegas Joint Venture - Preferred Equity Interest	n/a	n/a	650,000		650,000		—		—		—
Passport Park Joint Venture	95.0%	3	59,758		6,477		(6)		—		—
Industrial Partnerships	n/a	n/a	—		—		—		1,833		407
Total investment in unconsolidated entities			$	1,256,456	$	1,229,699	$	13,330	$	7,793	$	2,546

(1)As of December 31, 2025, the total carrying amount of the investments exceeded the underlying equity in net assets (i.e., basis difference) by $8.6 million. This basis difference is primarily due to the capitalized interest related to the data center and passport park development joint ventures.

A. Data Center Joint Venture

We own an 80.0% equity interest in a joint venture that we formed with Digital Realty Trust, Inc. in November 2023. As we do not control this VOE, we account for our investment under the equity method. This joint venture is expanding the capacity of its two data centers for the existing client, and our pro-rata share of the remaining estimated costs for this second phase of the development was $216.8 million as of December 31, 2025.

B. Bellagio Las Vegas Joint Venture Interests

The joint venture we formed with Blackstone Real Estate Income Trust ("Blackstone") owns a 95.0% equity interest in the real estate of The Bellagio Las Vegas. We made an initial investment in October 2023, including $301.4 million of common equity for an indirect interest of 21.9% in the property and a $650.0 million preferred equity interest. During the years ended December 31, 2025, 2024, and 2023, we recognized interest income of $52.7 million, $52.8 million, and $13.0 million, respectively, for 8.1% preferential cumulative distributions, included within 'Other' revenue in our consolidated statements of income and comprehensive income. The unconsolidated entity had total debt outstanding of $3.0 billion as of December 31, 2025, all of which was non-recourse to us with limited customary exceptions.

We have determined that this joint venture is a VIE, and we are not the primary beneficiary as we do not have power to direct activities that most significantly impact the joint venture's economic performance. As a holder of preferred interests, we do not receive any additional voting rights, nor do we have conversion and redemption rights. Our maximum exposure to loss associated with this VIE is limited to our common and preferred equity investments.

C. Passport Park Joint Venture

In November 2024, we established a joint venture with Trammell Crow Company ("TCC") to develop and operate three industrial facilities in Irving, Texas. As of December 31, 2025, we held a 95.0% common equity interest in the joint venture with $39.4 million in preferred equity. We have committed to investing an additional $105.5 million for development of the three industrial facilities. We have determined that we are not the primary beneficiary of this VIE because significant activities affecting economic performance are shared. TCC is the managing member, and we do not have substantive kick-out rights. We will continuously evaluate whether we are the primary beneficiary as power to direct significant activities can change during the joint venture's life. Our maximum loss exposure is limited to our common and preferred equity investments and committed funding.

D. Industrial Partnerships

All seven assets held by our industrial partnerships were sold during the year ended December 31, 2022. During the years ended December 31, 2024 and 2023, equity in earnings was primarily related to the resolution of income tax disputes and resulting distribution of cash the partnership had reserved for possible tax payments.

Investment in Preferred Equity

During the three months ended December 31, 2025, we acquired an $800.0 million noncontrolling, perpetual preferred equity interest in the real estate assets of CityCenter Las Vegas. The underlying partnership that owns the real estate assets is a VIE. Blackstone retained 100% of the common equity ownership of the partnership, and MGM Resorts International continues to operate the properties. We are not the primary beneficiary of the VIE because we do not have the power to direct the activities that most significantly impact the VIE's economic performance. Accordingly, the partnership is not consolidated. Our involvement with the VIE is limited to our investment in preferred equity, which is presented within 'Other assets, net' on our consolidated balance sheets. Our maximum exposure to loss is limited to the carrying value of the investment, as we do not provide financial support to the VIE beyond our contractual investment. As of December 31, 2025, the 'Investment in preferred equity' balance was $800.5 million, including $0.5 million of direct transaction costs.

The preferred equity provides for a cumulative preferred return at an initial rate of 7.4%, payable monthly in arrears. The preferred return is subject to scheduled rate increases starting on the fifth anniversary of closing. Blackstone may cause the partnership to redeem all or a portion of the preferred equity investment, and we may require redemption upon the occurrence of specified events. Early redemptions are subject to early redemption fees based on the timing and circumstances of the redemption, equal to 3.0% if redeemed prior to the first anniversary of closing, 2.0% if redeemed after the first anniversary and prior to the fourth anniversary, and no premium thereafter. Upon redemption, if we have not received an 8.325% unlevered internal rate of return on the redeemed amount, we will receive a make-whole payment to ensure that such return is achieved.

Preferred return income is determined by applying the contractual rate to the outstanding preferred equity balance, including any accrued but unpaid cumulative preferred return, which increases the carrying value of the investment. During the year ended December 31, 2025, we recognized $3.7 million of preferred return income related to the investment, which is included within 'Other revenue' in our consolidated statements of income and comprehensive income.