Atlantic City Development News

[xzmattzx]

The building boom in Atlantic City looks like it could be slowing down soon.

A.C.'s hot hand may be cooling off
Pricey casino projects getting delayed or dropped outright


ATLANTIC CITY, N.J. -- Unlike gamblers on a hot streak who think the good times will never end, the casinos know better. Yet companies have forged on with plans to spend at least $9 billion on a wave of new casino projects in the country's second-largest gambling destination, even as not-so-subtle signs were surfacing that it might be time to walk away from the table for a while.

Last week's announcement by Pinnacle Entertainment that it may scrap a mega-casino plan worth as much as $2 billion if credit markets don't improve has made the city's casino industry nervous.

"It's a very serious issue right now," said Nick Danna, a senior equity analyst at Sterne Agee & Leach. In the present environment, he added, "Companies simply can't justify embarking on these projects."

Deutsche Bank analyst Andrew Zarnett agreed.

"The credit markets are temporarily closed," he said. "That doesn't mean you can't raise money if you're willing to pay a very high rate of interest. But on anything at a reasonable rate, now wouldn't be the time. That type of deal just isn't getting done right now."

Danna, Zarnett and Pinnacle chairman Dan Lee all expect the credit climate to improve before too long. But the current crunch is raising questions about whether Atlantic City's expansions plans are too much, too fast.

Gov. Jon S. Corzine used to make exactly these types of financing decisions as chairman of Goldman Sachs. Corzine, who helped Lee push the plunger that blew up the old Sands Casino Hotel last October to clear the site for Pinnacle's project, expects things will be fine in the long run.

"Long-term investment decisions are rarely, if ever, made on the basis of short-term capital market conditions," Corzine said in an e-mail to the Associated Press. "We understand that today's markets are not receptive to heavily leveraged projects, such as new casinos, but we expect that appropriately structured and exciting projects, such as the Pinnacle casino, will proceed when conditions improve."

Pinnacle's warning shouldn't have come as that great a surprise.

In late 2006, the first slots parlors opened in the Philadelphia suburbs and immediately started stealing away some of Atlantic City's most profitable and reliable customers. As a result, 2007 was the first year in the 30-year history of casino gambling in New Jersey that revenues were lower than the year before, falling 5.7 percent; only three of Atlantic City's 11 casinos reported increases for the year.

Last April, a tough new law took effect limiting smoking to no more than 25 percent of the casino floor, further alienating some gamblers.

And last month, the Atlantic City Hilton Casino Resort, which had floated plans for a $1 billion expansion to help it compete with newer, larger casinos, quietly scrapped the plan, citing the declining economy. "There's no question these are challenging times," said Keith Smith, president of Boyd Gaming Corp., which owns the Borgata Hotel Casino & Spa, Atlantic City's most successful gambling hall.

The most ambitious plan for Atlantic City is MGM Mirage's $5 billion hotel-casino, which the company insists is still on track for a groundbreaking early next year.

A planned Atlantic City mega-casino by Pinnacle Entertainment for the site of the demolished Sands may be the latest victim of the national economic downturn.

http://www.delawareonline.com/apps/p...803040319/1003

[MasonsInquiries]

this is beautiful. hope it gets built!!

[WA]

WOW, all i have to say

[Maudibjr]

Wow, had no idea that much was happenening ion AC, even if half of it gets scrapped. Havn't been there in a few years.

[xzmattzx]

Some news regarding the Tropicana.

Tropicana is upgrading to lure guests


ATLANTIC CITY - With potential buyers due to tour the place soon, the Tropicana Casino & Resort said yesterday that it would open a new slots area with an Old Havana theme.
The upgrade is designed to improve the Tropicana's flagging slots operation, which declined 15.7 percent last year.

But it is also part of the casino's plan to regain market share and create a buzz in a place that suffered from bad publicity and customer flight in 2007. That's when its former owners lost their casino license for poor service and cleanliness levels, and poor compliance with state casino regulations.

The Tropicana is for sale under the supervision of a state-appointed trustee.

Several expressions of interest were received by last week's deadline, although Gary Stein, the retired state Supreme Court justice overseeing the sale, would not say how many. He expects a sale to be completed by June.

The work on the new slots area started about two weeks ago and is due to be completed in late April or early May, said Chris Strano, vice president of sales and marketing for AC Coin & Slot, which will provide 166 new machines for the project.

http://www.philly.com/philly/business/17008531.html

[Jim856796]

The newspaper report shown on post #21 shows that we may never build a casino resort on the site of the Sands Hotel.

[xzmattzx]

More change coming to the Marina District.

Trump Marina to become Margaritaville


Jimmy Buffett and the Jersey Shore - perfect together?

Trump Marina Hotel Casino, beaten down by age and competition in Atlantic City, will be in the hands of a New York gambling company that will rebrand and rename it Margaritaville Casino & Resort.

The new owner, Coastal Marina L.L.C., is buying the casino from Trump Entertainment Resorts Inc., the casino company under Donald J. Trump, for $316 million, Trump officials said yesterday.

In acquiring Trump Marina, Coastal will be faced with trying to turn around the worst performer among Trump's three casinos, one that sits next to the formidable Borgata Hotel Casino & Spa and Harrah's Resort in the city's Marina district.

The 23-year-old casino has consistently ranked as the lowest revenue generator among Atlantic City's 11 gaming halls. It also has the smallest number of hotel rooms - 728.

Last month, slots revenue at Trump Marina dropped 10.6 percent and table-game revenue was off 37.2 percent, compared with the same month a year ago.

Wall Street analysts praised the sale announcement, as the Marina District, about two miles from the famed Boardwalk, prepares for a new wave of competition.

Harrah's Resort debuted a $365 million hotel tower two months ago. A $400 million, glitzy new tower at the Borgata will open in about two weeks, and MGM Mirage has plans for a $5 billion casino on land that abuts Trump Marina.

"It's good because it helps the company reduce its debt load," said Andrew Zarnett, a gambling analyst with Deutsche Bank AG in New York. "It reduces their capacity in Atlantic City by about 25 percent, which means that they can now focus on the Taj Mahal and Plaza properties - a prudent strategy at this point."

Mark Juliano, Trump Entertainment's chief executive officer, said that the two sides began talking after the new year began and that a deal appeared imminent about six weeks ago.

"When this opportunity came up, it seemed like a natural fit," he said. "The brand is a perfect fit for the Marina, and [the new owner] thought the brand worked there better than at any other casino in Atlantic City.

"When you look at the location of the Marina and the Margaritaville theme, there is nothing better than having that cove," Juliano said. "It's really a terrific location."

About 8,800 Trump Entertainment employees were told about the sale yesterday morning. About 2,100 work at Trump Marina.

Coastal Marina is an affiliate of Coastal Development L.L.C., a privately held company based in New York that has focused on financing and redeveloping resort destinations, luxury hotels and gaming facilities.

Coastal Marina is run by chairman Richard T. Fields, who said in a statement yesterday that the casino offered vast potential to become "one of the most successful destination gaming resorts in Atlantic City."

Harrah's Entertainment Inc. is developing Margaritaville Casino & Resort in Biloxi, Miss., also with a Jimmy Buffett theme. That $700 million casino is scheduled to open in 2010.

Donald Trump, who is chairman of Trump Entertainment, said he was "very pleased with the transaction."

"It's terrific," he said. "It's a great site and a great location, with the only real usable water in Atlantic City and . . . the Marina. They are going to have a good time with this property . . . with building and redeveloping it."

The Trump casinos have been on the block for more than a year, and at least two deals fell apart. Tightened credit markets cut the number of potential suitors.

There had been speculation that the company was having a hard time finding a buyer for all three properties because of its onerous debt. The Taj Mahal, Trump's flagship casino, alone has a debt load of about $1.5 billion.

The sale would provide Trump Entertainment with badly needed capital. A lack of funds has hamstrung the company from making significant improvements to its Atlantic City casinos while competitors moved aggressively in adding towers and other nongambling attractions.

Construction began this year on the Taj Mahal's first expansion since opening in April 1990 - a $255 million, 786-room tower due to open Labor Day weekend.

Juliano said Trump Entertainment would invest the $316 million in the Trump Taj Mahal or Trump Plaza, make an acquisition or asset purchase outside New Jersey, or pay down debt.

He said new competition made it virtually impossible for Trump Marina to stay as it was.

"In the years to come, with the new tower at the Borgata, and the one at Harrah's, and the proposal by MGM, it would have required an enormous amount of capital for us to keep the property competitive," he said. "The balance sheet just did not allow us to do the improvements we needed."

Trump Entertainment reported a wider loss in the first quarter, blaming a general economic slowdown, competition from slots parlors in Pennsylvania and New York, and higher promotional costs associated with its year-old player-loyalty program, TrumpONE, which tracks customer play at all three Trump casinos.

"An incremental benefit will be that a number of Marina customers will migrate to the other two Trump properties," with the TrumpONE card as the driver, analyst Zarnett said.

MGM Mirage, which will develop the $5 billion MGM Grand Atlantic City Casino near Trump Marina, said yesterday's announcement was evidence that the Marina District was on its way.

"The energy, creativity and new capital brought into the market by new investors is exactly what Atlantic City needs to continue to grow and thrive as a major tourist destination on the Eastern Seaboard," said Bill Hornbuckle, president of the planned megacasino, which will be linked to the Borgata by an enclosed walkway.

http://www.philly.com/inquirer/busin...ritaville.html

[Middle-Island]

Sounds like it could reinvent the sleepy marina area. I stayed at that hotel in 1993 when it was Trump Castle.

[xzmattzx]

Originally Posted by Middle-Island

Sounds like it could reinvent the sleepy marina area. I stayed at that hotel in 1993 when it was Trump Castle.

The Borgata is already transforming the Marina District. MGM is now building a casino complex next to the Borgata. Actually, I would say that if thing go well in Atlantic City, the Trump Marina could be imploded in the next 10 or 15 years as the land is worth too much to not turn into a Vegas-style casino.

[Renton12]

Originally Posted by xzmattzx

More change coming to the Marina District.





http://www.philly.com/inquirer/busin...ritaville.html

Just some advice for the Margaritaville people. Make it easier to walk from Trumps old casino over to Harrahs and Borgota. Theres a nice walkway between Harrahs and Borgota along the waterfront. You get to the Brigantine bridge and it gets sorta crappy with no straight connecting walkway. I guess both Harrahs and Trump are at fault. Make a nice boardwalk going under the bridge and help connect all 3 casino's.

[Wheelmanrob]

Anyone know of current projects under construction?

It appears most from the beginning of this thread are near completion.

[xzmattzx]

Originally Posted by Wheelmanrob

Anyone know of current projects under construction?

It appears most from the beginning of this thread are near completion.

Not sure. I haven't been to Atlantic City since March. I have heard that the tidal wave of construction has been subsiding for months now, so I don't know if there is anything being built right now.

[xzmattzx]

The Madison House Hotel will be preserved, for now.

Madison House reborn in Atlantic City
Old hotel to take on international flavor


ATLANTIC CITY - They will start trickling in next month from South America. Groups from Vietnam, the Philippines and Thailand will follow in March. Then another wave from Eastern Europe will arrive in late spring and stay through the summer.

These aren't international tourists, but rather the thousands of foreign students who come to Atlantic City each year seeking seasonal employment in the casinos, hotels, local restaurants, Boardwalk shops - anywhere they can find jobs.

Although the students are vital to the tourism industry, they often are reduced to living in squalid housing a world apart from the fancy casinos and hotels where they work.

But this year, an elegant old hotel will reopen its doors in December to help solve that problem. For the students, it means a safe place to stay in near-luxury surroundings. For the Madison House hotel, it means a reprieve from the wrecking ball.

"It's a good thing to have an occupied building. It's a great thing to provide these students with a single facility where they all can stay," said Kim Townsend, chief executive officer of Pinnacle Atlantic City.

Pinnacle Entertainment Inc. inherited the lease for the Madison House when it bought the Sands Casino Hotel two years ago and launched plans for a new megaresort. The Madison's rooms were used for the Sands' guests, but when the casino closed for good in November 2006, the hotel also shut its doors.
Pinnacle resurrected the Madison as a corporate office, but with only 10 employees occupying the 14-story building, the hotel is a virtual ghost town. Townsend explained that the company kicked around ideas for making better use of the hotel and decided to reopen it as housing for foreign students who come here to work.

"We just saw it as a win-win situation," she said. "It's a win for us because we get to meet new friends. It's a win for the students because it keeps them in a single establishment."

Pinnacle will be reaching out to the Council for International Educational Exchange for help in bringing students to the Madison. The company also plans to work with the Atlantic City Convention & Visitors Authority, the Atlantic City Hotel & Lodging Association, the casinos and other local businesses for student referrals.

"I think it's a marvelous idea," said Howard Bacharach, executive director of the hotel association. "We should find more spots like this one."

To help students adjust to their new surroundings, Pinnacle is developing a handbook that will contain information on such things as the public transportation system, the local post office and automated cash machines at banks. The handbook also will spell out rules they must follow in the hotel.

"There will be a strict no-alcohol policy," Pinnacle spokeswoman Carmen Gonzales said.

Foreign students are typically known as J-1s, so named because they come here on J-1 work and travel visas. While many of the students toil in menial, low-paying service jobs, what they make in the United States usually exceeds what they can earn in their home countries.

Much of what they earn, however, goes toward paying for overpriced housing. Based on interviews with foreign students, The Press of Atlantic City reported last year that they often live in filthy conditions in run-down local boarding houses and apartment buildings.

Bacharach noted how students sometimes crowd together in one room, all sharing the same mattresses as they rotate through different work shifts.

"They were all sleeping in the same beds, in the same linens. God only knows if the linens were changed all summer," he said.

At the Madison, students will pay only about $80 per week - an extraordinary bargain for a hotel that was transformed into all suites during a $7 million renovation when it was under the Sands' control. Gonzales said there are 112 suites available. Sleeping in separate beds, students will double or triple up in most rooms, with possibly more in the larger suites.

Amenities include on-site laundry facilities, two lounges with TVs, vending machines, microwave ovens, refrigerators and high-speed wireless Internet access.

"We are providing a valuable service to these students and the regional businesses that employ them by offering accommodations in a market where there is a shortage of suitable student housing," Gonzales said.

When it originally opened in 1930, the Madison was considered a luxury hotel. Constructed of red brick, the Colonial Revival-style building features marble floors, arched windows, chandeliers and a stately staircase modeled after the one in Philadelphia's Independence Hall.

The Madison was designed by William Walton and Walter Price, the latter the brother of William Price, the famed architect of Atlantic City's posh Marlborough-Blenheim and Traymore hotels. The Marlborough-Blenheim and Traymore are long gone, cleared away to make room for the city's casinos. The same fate may yet await the Madison House.

The Madison is listed on the National Register of Historic Places, giving it protected status but hardly an ironclad guarantee it will be saved from demolition. Pinnacle pays $2 million annually on a lease that runs to 2012 with the hotel's private owners, the Madison House Group.

Pinnacle imploded the Sands in October 2007 to create space for its proposed $1.5 billion casino. The company has made no secret of its desire to use the Madison's site for casino development. However, Pinnacle's casino plans have been stalled by the country's sluggish economy and the global credit crisis, giving the Madison some extra time.

Townsend indicated Pinnacle likely will continue using the Madison for student housing until the end of the lease in 2012.

"I think it's the greatest idea since wax paper. I hope it is," she said of the Madison's latest incarnation. "We're probably going to do it through our lease."

The Madison House, which closed two years ago when the Sands Casino Hotel shut its doors for good, will reopen next month to foreign students who come to Atlantic City for jobs each year.

http://www.pressofatlanticcity.com/1...ry/311104.html

[NorthaBmore]

Originally Posted by MasonsInquiries

this is beautiful. hope it gets built!!

That building is amazing! That would go by the Marina if built, right.

[Renton12]

This Project is dead. And all other A.C. projects have been postponed.

Originally Posted by NorthaBmore

That building is amazing! That would go by the Marina if built, right.

[JohnFlint1985]

AS of couple months ago. Revel Casino goes forward as planned.

[WA]

Isn't Atlantic City not doing so well right now? Why would someone want to build that now??

[xzmattzx]

I know that most projects are on hold or cancelled. I was under the impression that all consturction had stopped; seeing the Revel go up is a surprise to me as well.

[JohnFlint1985]

Originally Posted by xzmattzx

I know that most projects are on hold or cancelled. I was under the impression that all consturction had stopped; seeing the Revel go up is a surprise to me as well.

Revel was supposed to have two towers standing side by side. As of right now one is well on the road to be finished soon. the other one is just started. According to my friends who actually have business right on AC boardwalk the other tower is supposed to be started soon since they supposedly found financing and it is a prime spot right on the ocean.
These pictures I took back in the September 2009 and there was no sign of stopping anything.

[JohnFlint1985]

Originally Posted by WA

Isn't Atlantic City not doing so well right now? Why would someone want to build that now??

apparently it is not as bad and also keep in mind it is not finished yet. Once it will be the economy should go back to some sort of upwards movement.
As Trump use to say - recession is the best time to build anything.