Atlantic City’s Revel Casino Hotel Sells for $110 Million at Auction
If someone paid me $110 million for anything I owned, perhaps even one of my children (not both – I’m not a monster), I would be ecstatic. The owners of the Revel Casino Hotel, though, can’t be happy at all about how the last two years turned out. $110 million is not much as a sale price for your property when it opened just a little more than two years ago at a cost of $2.4 billion.
But that is the Revel’s situation today, as it accepted a $110 million bid from Brookfield US Holdings LLC, a division of Brookfield Asset Management, Wednesday morning, concluding an auction process that began Tuesday.
The auction was actually supposed to take place last Wednesday, but was delayed until this week. Glenn Straub, head of the Polo North Country Club, Inc. and the lone publicly-known bidder at the time, was not pleased at all with how the sale of the Revel proceeded. He made an offer of $90 million for the Atlantic City casino on September 10th and believes he should be the one taking control of the property, as his bid was the only one accepted before the September 23rd court-determined deadline. Instead, his bid served as a “stalking horse,” meaning that it set the floor for all subsequent bids. So even though Straub was under the impression that Revel executives accepted his offer, the casino still went up for auction.
Image courtesy: Hotels.com
When the auction was delayed last week, Straub made his feelings known. His attorney, Stuart Moskovitz, told The Press of Atlantic City that Revel executives were holding private meetings to discuss offers during the time the auction was supposed to be taking place, something he and Straub felt was sketchy. Straub even went so far as to say that Revel was pushing the auction back just so the attorneys can bill more hours.
Frustrated, Straub proclaimed that he didn’t “need that monstrosity of a building” in order to accomplish what he wanted in Atlantic City. And those goals of his, they are quite…bold. While Straub planned to keep some gambling active at the Revel, his real vision for the property was to, as The Press put it, “….build a second tower at the property and colonize it with ‘geniuses’ working on pressing global problems, such as nuclear waste disposal. Wednesday’s discussion included talk of ‘high-speed catamarans’ to ferry people to and from Manhattan, ‘super jumbo jets’ to fly Arabian tourists into Atlantic City and a ski resort of elevator-equipped artificial mountains.”
So, yeah, there’s that.
When all was said and done with the auction, Straub came in second with a $95.4 million offer, which would likely be accepted if Brookfield cannot close on the purchase. Straub will also be paid $3 million for his role as the stalking horse. Angry at how it played out, Straub plans on appealing, hoping a court will deem him the winner.
Assuming that doesn’t happen and that an October 7th court hearing goes smoothly, Brookfield will take control of the Revel. The company intends to re-open it as a full-fledged casino and hotel, though it has not revealed any plans on how it intends to make the property competitive. Though by only spending $110 million instead of the original $2.4 billion on the Vegas-style casino, Brookfield has significantly more leeway in its attempts to make the casino profitable. Fortunately, Brookfield has experience in this arena, as it owns the Atlantis Casino Resort in the Bahamas, which is home to the Pokerstars Caribbean Adventure, as well as the Hard Rock Hotel and Casino in Las Vegas.
Atlantic City area residents probably want Brookfield to win the day, since the company’s intentions are to keep the Revel as a casino. 2,800 people lost their jobs when the Revel shut its doors on September 2nd, so Brookfield’s plan is the best chance for most of them to become re-employed. The Press of Atlantic City quoted part of a short statement by Bob McDevitt, president of UNITE-HERE Local 54, who said, “We haven’t seen the bids, but we assume that they are planning to hire back all of the people who worked at Revel previously.”
The union is also battling with the Trump Taj Mahal, whose parent company recently declared bankruptcy. The Taj wants concessions from the union so that it can save money and possibly survive. If it cannot find a way to restructure its debts, the Taj Mahal may close next month.
The Revel was the third Atlantic City to close this year, after the Atlantic Club and Showboat. The Trump Plaza closed a couple weeks later, and, as mentioned the Trump Taj Mahal may be forced to follow suit.
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