May 20, 2012 -
Wanna buy a casino? One is up for sale—the Trump Plaza in Atlantic City.
If Bob Griffin, who runs the Trump Taj Mahal and the Trump Plaza, has his way, his company will shed the Plaza and several other assets.
Meanwhile, Griffin, the CEO of Trump Entertainment Resorts, Inc., said during a presentation at the East Coast Gaming Congress in Atlantic City last week that his focus is on the Taj Mahal.
The Taj is getting a new Robert Steakhouse of NYC to replace the Safari dining room, a $2 million Kids Quest daycare center, and upgrade of the façade that Griffin admitted was “tired”. The Taj is also going ahead with a $20 million strip club, Scores.
Griffin said that capital raised in a sale of the Plaza, a headquarters building and other assets would help Trump Entertainment restructure its debt.
Griffin said that investor Carl Ichan is currently holding Taj Entertainment debt at 12 percent and while speaking well of Ichan as his company’s banker, Griffin conceded the interest rate was a bit “rich”.
About a year ago, Trump Entertainment sold the old Trump Marina to Landry’s Inc. CEO Tilman Fertitta, who rebranded it as a Golden Nugget and poured $150 million into the building in what looks to be a well-targeted renovation.
The old Trump Marina sold for the bargain price of $38 million
While Griffin didn’t say what the price tag was on the Trump Plaza, one would think it would be more than the Marina, if for no other reason than the Plaza’s location.
While the Marina was at, well, the Marina District along with the Borgata and Harrah’s with zero foot traffic, the Plaza is smack in the middle of the Boardwalk with lots of foot traffic. It also happens to be at the end of the Atlantic City Expressway.
However, despite any advantages of geography, the Plaza has been hemorrhaging revenue. Its revenue is down 24 percent for the year, the Press of Atlantic City reported. If the Plaza operates at a loss, then it may have to be sold at a lower number than its prime location would otherwise suggest.
So who might be a buyer?
We have two guesses.
One is the publicly traded Pennsylvania-based Penn National, and the other is private Maryland developer David Cordish.
Both are smart operators and at first blush, one would say that both are too smart to get into the challenging Atlantic City market that’s in a fight for its life against Pennsylvania’s quickly maturing gaming industry.
However, Penn National has shown that it’s willing to take on foundering properties if the price is right. The company did just that in Las Vegas when it scooped up the luxury M Resort, south of the Strip when that casino-hotel got into financial trouble after opening up in the middle of the Great Recession. But the M Resort was a sumptuous building and at the Plaza, Penn National will have to spend some money as Fertitta did when he redid the Golden Nugget.
Cordish has been an aggressive and successful developer, and happens to be opening his own new casino south of Baltimore called Maryland Live!. Looking at Cordish’s track record, you have to notice that his practice has been to build new, not buy old.
However, he built the The Walk premium outlet center in Atlantic City when few others were willing to take that kind of chance. While Cordish no longer operates the first two phases of The Walk after selling it to Tanger Outlets recently, he said at the same East Coast Gaming Congress last week that he’s going ahead with an addition to The Walk extending it from the foot of the Atlantic City Expressway north on Atlantic Avenue to the Trump Plaza. When that phase was first announced, it was to be a dining and entertainment district with the name Atlantic City Live!, following the branding pattern of Cordish properties that feature the word Live! in their titles.
Putting all that together, it’s not inconceivable that Cordish might work out something with the Casino Reinvestment Development Authority—which is tasked with the overhaul revitalization of Atlantic City—in the way of a public-private partnership that could make a purchase of Plaza feasible for Cordish.
Of course, billionaire Ichan has to be considered. After all, he is the creditor for the company.
When the Plaza is sold, it will leave just one casino in Atlantic City with the name Trump. At one time, there were four—the Taj Mahal, the Plaza, the Marina that was formerly the Castle, and the World’s Fair, which was demolished more than a decade ago.
Donald Trump has little to do with operating the company any longer.