Atlantic City: Dim hopes and massive debts

Brookfield Property Partners, new owners of Revel is planning to get back into the casino wars in Atlantic City. “Revel is a brand-new trophy asset on the beachfront, which we are acquiring at a substantial discount to replacement cost. We are excited about owning the newest and highest-quality asset in Atlantic City at such an attractive basis,” said spokeswoman Melissa Coley of Brookfield’s $110 million acquisition. (The purchase price at least brings ROI into feasible range, depending on how much debt carries over.) Brookfield will reopen the casino and it has something that Revel 1.0 and 1.1 didn’t: a player database from the Hard Rock Hotel in Las Vegas and Atlantis Paradise Island in the Bahamas. At the latter, “Brookfield spent $8 million to upgrade hotel rooms, also improving restaurant facilities, expanding meeting space, and launching a preseason college basketball tournament, the Battle 4 Atlantis.”

Still, casino analyst Sal Scheri issued a typically blunt assessment of the situation: “If they come in and say they are going to expand the Atlantic City market, they’re kidding themselves and they’re kidding everybody else.”

Also, Brookfield has chosen a devil of a time to add another troubled casino to its portfolio. It’s on course to default on an interest payment on $988 million in debt and interest looming over the HRH LV. Perhaps this is what Brookfield means when it says it has a contrarian investment philosophy: When in trouble, dig a deeper hole.

Wannabe owner Glenn Straub continues to kvetch, saying he was asked to top Brookfield’s bid in the wee hours of the morning — not exactly banker’s hours. Revel attorney John Cunningham, while calling Straub “a disgruntled losing bidder,” basically confirmed the narrative, adding that Revel didn’t want to risk having Brookfield’s bid taken off the table because Straub wanted until Oct. 6 to top it. If Straub is still serious about Atlantic City, there’s still a lot of ex-casino real estate to be had. Worst case scenario, his $3 million breakup fee buys a lot of crying towels.

* Speaking of the bankrupt, Trump Entertainment Resorts has submitted its Chapter 11 plan to the courts. It’s contingent on a lot of ifs: If Carl Icahn invests $100 million; If Icahn’s group rolls old debt into 55% equity and $292 million of newly issued debt; If union Unite-Here embraces the elimination of its pension and health-care plans; If Atlantic City shaves $25 million off the property-tax bill. Already Trump is seeking to terminate its current collective-bargaining agreement and cease pension-fund contributions, which will presumably escalate the hostility between union boss Robert McDevitt and Trump CEO Robert Griffin.

Unsecured creditors will be left with nothing under the plan. And the property-tax request may meet a frosty reception at City Hall, which has rebuffed Trump once before. Unite-Here has already nixed any concessions, so doom for Trump Taj Mahal appears imminent.