A new buyer for Atlantic City’s closed Revel casino has been named again, but the buyer is unhappy with the price and said he may challenge the sale.
Florida-based developer Glenn Straub and his Polo North Country Club were declared the winning bidder for the casino at a bid of $95.4 million for the $2.4 billion property. But Straub has complained all along about the way a bankruptcy auction was held for the property and wants the price lowered to $87 million.
Two court hearings on the sale were held last week.
Straub sought the reduction at the first hearing. First, Straub sought to have his $95.4 million reduced to his initial bid of about $90 million. Polo North also contends that a $$3 million breakup fee it was due for losing the auction should be applied to the previous bid of $90 million reducing the final price to $87 million.
However, U.S. Bankruptcy Judge Gloria Burns rejected both of those moves and awarded Polo North the Revel for the bid of $95.4 million.
“There was a fair auction,” she said. “The sale price was fair.”
Straub, however, maintains that the auction was conducted improperly. He has said the auction lacked transparency and he was not informed about who he was bidding against. The company says it would not have increased its bid if they had known the auction would be run improperly.
Polo North actually lost the bidding, but potential buyer Brookfield US Holdings—which bid $110 million—eventually walked away from the deal after it was unable to renegotiate a deal with the owners of the casino’s expensive power plant Arc Energy Partners.
Straub sent mixed signals after the hearing, saying he is weighing his options and might appeal the sale price, but also declared that he “won the war.” He also said he expects to close on the sale within 30 days.
Later in the week, Burns settled two other issues concerning the potential sale.
Burns ruled Straub can buy the property without adhering to agreements Revel had with the state Casino Reinvestment Development Authority and also leases with restaurants, nightclubs, and other tenants in the building.
Under Revel’s CRDA agreement, the state agency had the right to do whatever it wanted with a 1.25 percent tax on casino revenues. The money from that tax, paid by all casinos, is used for development projects in Atlantic City, with the casinos having little say on what is done with the money.
Straub wants to help determine what to do with the money from the 1.25 percent tax on casino revenues, reports Philly.com.
“He does want input on how this money is used,” Straub’s attorney, Stuart J. Moskovitz, told Burns. “He thinks he can to a better job.”
Burns also ruled that Straub’s Polo North Country Club Inc. can terminate all of Revel’s tenants’ leases.
Moskovitz told the judge that Straub wants to negotiate with leaseholders, but also wants to change their locations at the property.
“Where these amenity tenants are located essentially prevents an appropriate use of the building,” Moskovitz said.
Several nightclubs and other leased businesses thrived at Revel even as the casino was losing money and had sought to stay open despite the building being shuttered.
What exactly Straub intends to do with the property as whole, however, is unclear, as he told reporters he is considering seven or eight options for the property during breaks in the earlier hearing.
Among them are building a huge water park at the resort, which he described as a $108 million project that would be both inside and outside the Boardwalk complex. He also said the property would retain a casino to “pay the bills.”
In the past, Straub has talked of bringing in an outside firm to operate a casino saying gaming isn’t part of his family business. He also said he will remove the Revel brand from the building and sell the naming rights to the casino.
But Straub has also talked of creating a major “think tank” at the property to “solve some of the world’s problems,” and of running high-speed ferries and catamarans to New York City to bring in customers.
As for the main stumbling block in the casino’s previous deal with Brookfield—namely the high cost of providing energy to the building—Straub said he will buy the hotel free of its contracts, including its agreement with ACR Energy Partners.
Asked how he could run the property without power, he said “We can do anything.”
Meanwhile, another shuttered Atlantic City casino may also get new life. Pennsylvania Real Estate Company has become the third new owner of Atlantic City’s closed Atlantic Club casino.
Endeavor Property Group LLC, which specializes in residential and senior-citizen projects will buy the closed casino tower from TJM Properties Inc. according to property records reviewed by the Press of Atlantic City.
The 800-room property closed as a casino hotel in January 2013 as the first of four casino to close in the resort last year. It was originally bought in a bankruptcy auction for $23.5 million by Caesars entertainment and the Tropicana Casino Resort—which stripped the property of gambling equipment and acquired its database—before being sold to TJM for $13.5 million. That sale included a deed restriction that the property could not be used as a casino.
Endeavor, of Devon, Pennsylvania, is buying the complex from TJM Properties Inc. for an undisclosed price. Neither company has commented on the transaction.
Endeavor is a developer of several mixed-use residential projects, including senior-citizen housing, totaling more than 1,500 units in the suburbs of Philadelphia.
