Atlantic City’s shrinking casino market got a big boost as a last-minute buyer emerged for the closed Revel casino, picking up the .4 billion hotel for just 0 million.
Most importantly, the buyer—Brookfield US Holdings LLC, which runs the Hard Rock casino in Las Vegas and the Atlantis Paradise Island casino in the Bahamas—says they want to reopen the hotel as a casino.
The previously announced lead bidder for the property—Glen Straub, a Florida-based developer who initially bid $90 million—says Revel’s attorneys botched the auction, but his attorney told the Associated Press that he has not decided whether to challenge the result. Straub was chosen as backup bidder for the property should Brookfield not be able to close the deal.
A bankruptcy judge must approve the sale. A hearing is scheduled for October 7.
Brookfield is a Toronto-based, asset-management company. Under the deal, it will pay $110 million for the 2-year-old casino that cost $2.4 billion to build. The company did not release its specific plans for the property, but did say it would remain a casino.
“Revel is a brand-new trophy asset on the beachfront, which we are acquiring at a substantial discount to replacement cost,” the company said in a statement. “We are excited about owning the newest and highest quality asset in Atlantic City at such an attractive basis.”
Brookfield’s dealings in Nevada where it owns the Hard Rock, however, have dampened some of the enthusiasm in the city for the announced deal.
The company told securities regulators in August that it was unable to make an interest payment due that month, and was working on a deal with its lenders. Those lenders, however, could demand immediate repayment of about $1 billion in debt.
Brookfield spokesman Andrew Willis told the AP that that the Hard Rock negotiations will not affect the company’s ability to complete the Revel purchase.
Willis could not say when the Revel might reopen or whether it would even still be called Revel. But he did confirm that the property will remain a casino hotel.
“Our expertise is running casino, hotel properties,” Willis said.
After four casino closings in Atlantic City this year the news was met with optimism in the resort.
“These are the first people that realized what I’ve been saying about Atlantic City turning the corner and being a great investment due to the low prices,” Atlantic City Mayor Donald Guardian told the AP. “We’ve had a lot of bad news. This is certainly some good news.”
Local union officials also praised the sale, saying they were looking forward to working with Brookfield. The casino’s previous owners opened the property as a non-union shop, leading to some bitter fights between the unions and the casino. About 2,800 workers lost their jobs when the casino closed.
Meanwhile, Straub and his Polo North Country Club Inc.’s interest in the property still may have a bearing on the suction result. Straub’s attorney has complained about the way the auction was handled—saying it lacked transparency—and still could challenge the procedure.
“We have to decide whether we’re going to fight it in court, whether to try to top Brookfield’s bid, or something else,” attorney Stuart Moskovitz told the AP.
Straub, however, was also quoted in various media reports saying he would “go to the courts” over the auction results. In initial reports, Moskovitz also said the company planned to challenge the auction, but then apparently tempered his position.
Straub had already filed one objection to the auction saying his company was not properly advised of competing bids and asking for a delay in the auction. The bankruptcy court denied the delay, but a hearing on that objection is scheduled for October 20.
Straub’s bid now stands at $95.4 million according to a statement from Revel.
The bidding process went on for some time and Brookfield made bids of $94 million and $98 million before finally bidding $110 million, according to Bloomberg News. The final bid was made at about 11:30 p.m. with the stipulation that the offer was only good until 6 a.m. the next day.
Straub, speaking to Bloomberg, said he was willing to bid as much as $135 million, but couldn’t put the bid together in time.
“In the nighttime we couldn’t get a hold of the whole fleet of people that worked on this bid,” Straub told the new service. “We were willing to go ahead to rebid. We said we needed four more hours to do it. There was no reason to break and to award them the business.”
Straub also told Bloomberg he intends to challenge the auction in court.
Lawyers for Revel told Bloomberg that they waited as long as they could for Straub’s counter bid, but none came, pointing out that they would have welcomed the higher bid, but couldn’t risk waiting past the deadline and having the Brookfield bid revert to $98 million.
Revel called Straub’s complaints about the auction baseless.
“All he is, is a disgruntled losing bidder,” John K. Cunningham, a Revel attorney, told the news service.
Straub had talked of a wide variety of plans for the property, including opening a university, which he called a “genius academy” and various entertainment and sports-related components. He has also said he may include a casino at the site run through a separate management company.
Straub offended many Atlantic City locals when he said that the university would be open to all who are “free, white and 21.”
