Stockton University has delayed the sale of the former Showboat casino in Atlantic City for two months, only this time the delay is intentional.
The school said in a press release that there are financial benefits in holding off on finalizing the sale until the new calendar year of 2016. The school will receive an extra $1 million—to $23 million—for the property and its holding costs for the extra two months will be covered by the buyer.
The school is selling the property to Philadelphia developer Bart Blatstein’s Tower Investments for $23 million.
“This is a positive occurrence for both the buyer and Stockton,” Harvey Kesselman, Stockton’s interim president, said in a news release. “There are substantial tax benefits for the buyer, Tower Investments, by waiting until the beginning of 2016 to close. For Stockton, our carrying costs will be covered, plus we will immediately recoup more of the funds that have been spent in holding this property—a financial benefit to the university and its students. This extension will be backed with a guarantee.”
Settlement of the sale had been scheduled for last week, but the two sides signed an amended sales agreement. According to the Associated Press, under the revised sale contract approved by Stockton’s board of trustees, the purchase price was increased by $1 million, to $23 million. An escrow fund of $1.1 million will be released to Stockton to cover costs it incurred since September, and another $1 million will be deposited in escrow to be applied toward either the sale, or liquidated damages if the sale falls through, the AP said.
Blatstein told Philly.com that the extension was a win-win and that he remains excited about buying the site.
Stockton originally bought the Showboat from Caesars Entertainment for $18 million in late 2014. The school planned to develop an Atlantic City campus at the site. But that plan became bogged down by competing deed restrictions on the site.
Caesars sold the property to the school with a deed restriction that said the site could not be used as a casino. However, the neighboring Trump Taj Mahal casino invokes a 1980s covenant signed with Showboat indicating the site could only be used as a casino.
Despite the pending sale to Blatstein, Stockton will still have lost money on maintaining the closed property for the last 10 months.
And one possible hurdle still remains as Glenn Straub, the Florida developer that bought the nearby Revel casino, is still threatening to block the sale to Blatstein. Straub originally had a deal with Stockton to buy Showboat for $26 million, but the deal fell through due to the competing deed restrictions.
Though a judge ruled that Stockton could seek another buyer, Straub told the Press of Atlantic City that he feels his contract to buy the property is still valid and he intends to sue the university.
It’s also not clear how Blatstein plans to solve the problem of the competing restrictions. Blatstein still did not disclose his plans for the property, telling Philly.com only “it’s the best property in Atlantic City.”
Blatstein then told the Associated Press he is considering re-opening the property as a casino, but also said there are many non-gambling options, including office space and entertainment uses, that would work well at the building.
“I didn’t realize all the options that were out there,” he said. “There’s a number of really great possibilities, and I’m weighing them all. Aside from the obvious, which is reopening it as a casino, there’s time shares, office, and entertainment. I’m getting companies wanting to locate office space there.”
Blatstein also said he is confident the problem of the competing restrictions can be overcome.
“I don’t think anybody is out to keep that property from being repurposed,” Blatstein told the AP.
In another matter related to Blatstein, the developer has announced he will change the way his Playground entertainment complex on Atlantic City’s Boardwalk is managed.
Blatstein wants the entertainment venue to transitions from being controlled by his company to individual leases. Blatstein himself controls the property—the former Shops at Caesar Pier—through a long=term lease with Caesars Entertainment.
The site had opened this summer with eight entertainment venues, but has struggled to draw audiences.
According to the Press of Atlantic City, the new operators will include Brian Nagele, owner of North Shore Beach Club, which bills itself as Philadelphia’s only 21-and-older swim club.
