Positive results traced to the involvement of New Jersey Governor Chris Christie

It was a week that could reverse the long slide Atlantic City has endured for the past three years. On Monday, a struggling casino found a new owner that promises to return to a storied brand, and late in the week, the city’s newest casino got the rest of the funding that will introduce another upscale resort to the city, potentially creating a new synergy.

On February 17, Revel Entertainment Group announced it had secured the $1.15 billion it needs to complete the construction of its mega-resort on the Atlantic City Boardwalk. Work on the $2.8 billion casino, which stalled in January 2009, is expected to resume quickly, putting 2,100 construction workers back on the job.

“We are delighted to be moving toward completion of Revel, which will have broad positive employment and economic implications for Atlantic City and the state of New Jersey,” Kevin DeSanctis, Revel’s CEO, said in a press release. DeSanctis had been seeking funds since the project ran out of money and its primary backer, Wall Street giant Morgan Stanley, pulled out in April 2010, taking a nearly $1 billion loss. Begun in 2007, only the casino’s glass exterior—designed to mimic the movement of the ocean—was completed, leaving the vast interior space empty.

New Jersey Governor Chris Christie, who has championed the project as part of his economic reform of Atlantic City, was instrumental in helping the company secure funding. Revel will receive $261.4 million in state tax reimbursements over a 20-year period as part of its financing plan. The company had been seeking two private loans of $850 million and $305 million. Rothschild acted as the company’s sole financial advisor in connection with the transaction. With the money now in place, the casino is on track to open in the summer of 2012 with 1,100 hotel rooms. When fully operational, it will generate 5,000 full-time positions, one of the biggest private employers in southern New Jersey.

Beyond the immediate benefits of putting people back to work, the project is seen as a psychological boost to an industry that has experienced four years of falling revenues. The completion of Revel is considered the key to rejuvenating the economic future of Atlantic City.

Meanwhile, a recognizable brand in Atlantic City’s gaming history will return soon now that Landry’s has purchased the Trump Marina Casino Hotel in the Marina district of Atlantic City from Trump Entertainment Resorts. The company, which owns a portfolio of restaurants and hotels, will change the brand of the hotel to the Golden Nugget, after the hotels of the same name it owns in Nevada.

While Landry’s was not the owner of the Atlantic City Golden Nugget in the 1980s—Steve Wynn built and owned the property until he sold it and used the proceeds to build the Mirage in Las Vegas—there are still many players who fondly remember playing at the original hotel. While Landry’s examined buying the original Golden Nugget—now the Atlantic City Hilton—executives of the company were discouraged by an ongoing battle between the property’s lenders and owners.

Landry’s reportedly paid $38 million for Trump Marina, subject to a working capital adjustment at closing, and says it will invest more than $150 million in renovating the building.

“We are excited to bring the Golden Nugget back to Atlantic City. Our plan is to transform the Trump Marina into a luxurious and exciting hotel and casino with the highest level of service,” said Tilman J. Fertitta, president and CEO of Landry’s. “All improvements are expected to be completed by the end of this year. Naturally, the Golden Nugget will honor all existing Trump Marina customer points and rewards, not only in Atlantic City but also in the Las Vegas and Laughlin Golden Nuggets.

Trump Marina is located near the city’s two most popular casinos, the Borgata and Harrah’s, but has been the least successful of all the Trump casinos and often brings up the rear of all 11 Atlantic City casinos in gross gaming revenues. But the proximity to Borgata and Harrah’s must be seen as a positive.

Also, the size and location are a plus. With 728 rooms and suites, the new Golden Nugget will inherit a 25-year lease on the adjacent Farley State Marina, a first-class docking facility for boats from 25 feet to 500 feet. The deck and marina buildings are assets that Landry’s will want to maximize.

In the press release, the company says that it will upgrade the hotel rooms—many of which haven’t been touched in 20 years or more—the pool and the restaurants. In Las Vegas, Landry’s has invested more than $300 million in the Golden Nugget it purchased there several years ago. In addition to a unique pool and shark aquarium that has achieved international recognition, the Rush Tower added additional rooms to the hotel, and includes a Chart House restaurant featuring a 100,000-gallon tropical aquarium, and high-end retail shopping. Landry’s also owns the Golden Nugget Hotel Casino in Laughlin, Nevada. The company has also reportedly been exploring expansion opportunities on the Gulf Coast in Mississippi and is expected to be a backer of legalizing gaming in its home state of Texas.

Some of the restaurants planned for the Golden Nugget include those brands in the Landry’s portfolio: Chart House, Red Sushi, Lillie's Asian Cuisine and Noodle Bar, Grotto Italian Ristorante and Vic and Anthony's Steakhouse.

While the Golden Nugget has been gone from Atlantic City for more than 20 years, there is still a fondness for the brand. Wynn used the property to catapult him and his company into a household name. His operation forever changed the way casinos are run. In one legendary action, he shared the casino’s success by buying autos for every employee as a Christmas bonus in 1981. He lured Frank Sinatra away from Resorts International, and created a series of memorable television commercials that people recall to this day.

For Trump, the company says it will use the net proceeds from the sale to buy down debt. Trump Entertainment Resorts recently emerged from bankruptcy, already reducing more than $1 billion in debt to $344 million.

“We’ll be able to pay down debt, create equity and narrow our focus on two rather than three properties,” said David Hughes, chief financial officer of Trump Entertainment Resorts. “So far, we’ve focused on cutting costs and creating efficiencies. Now, we’ll be able to look at the topside and how to produce more revenue. Our goal is building EBITDA for the company.”

Hughes says the company will concentrate on Trump Plaza, where a new general manager will be named by next week. “It’s a great location and has loads of potential,” he says.

Late last year, Trump CEO Bob Griffin told Global Gaming Business that everything was for sale at the right price. Hughes doesn’t dispute that, but says they are not actively shopping any property.

“There’s been a lot of interest in Trump Plaza,” he says. “We’ve fielded many calls over the past month. But we’re not interested unless it benefits our investors to a great extent.”

The Golden Nugget deal is expected to end the saga of the sale of Trump Marina. In late 2006, Coastal Marina, an affiliate of Coastal Developments of New York, controlled by former Trump associate Richard Fields, said it was close to a deal to buy Trump Marina for $316 million. Six months later, the price dropped to $270 million, but the sale soon collapsed as the economy worsens. In early 2010, the deal resurfaced, but this time with a $75 million price tag. Again, the deal fell apart amid acrimony and threats of legal action.

Trump Marina began its life as the Atlantic City Hilton and was the pawn in one of the worst decisions made by the Casino Control Commission when it denied a license to Hilton Hotels, sending a message to the investment community that Atlantic City was not a friendly play to put your money.

Ironically, some of the reasons the Golden Nugget has returned to Atlantic City are driven by a more friendly state government. The recent laws signed by Governor Christie, who has dedicated his administration to the revitalization of the town, include more state control and regulatory reduction. Trump Marina falls into a newly created tourism district that will be controlled by the Casino Reinvestment Development Authority, with only marginal involvement from a dysfunctional city. Fertitta told the Atlantic City Press that Christie’s actions played a role his decision to buy in the city.

“I think that anytime you see a progressive governor get behind a certain area, it does mean something to us,” he said.

Landry’s is a privately held company owned by Fertitta, who won a long takeover battle of publicly traded Landry’s Restaurants last October.

Tilman Fertitta is a cousin to Frank and Lorenzo Fertitta of Las Vegas, principals in the Station Casinos and the martial arts organization, Ultimate Fighting Championship.

By Staff