Luxor Capital Group to Own Majority Stake in Ocean Resort Casino
After only about a year under new ownership the Ocean Resort Casino in Atlantic City is changing hands yet again. After weeks of rumblings that control of the property was in flux, the casino confirmed this week that Luxor Capital Group, a New York-based hedge fund and no relation to the famous pyramid casino in Las Vegas, will soon having a “controlling level” of ownership stake in Ocean Resort.
“Ocean Resort Casino and AC Ocean Walk recently received a commitment of $70 million in new strategic capital,” the casino said in a press release. “The strategic investment is expected to close in early February, pending the receipt of the appropriate regulatory approvals and final documentation. The proposed investment will help fund the 2019 projects and provide Ocean Resort Casino with the financial flexibility to pursue even greater investment in its guest experience going forward.”
The investment is being funded mostly by Luxor Capital, which already owns a significant stake in the company. When the investment is approved, Luxor’s stake in the property will escalate to a high enough level that it will effectively own Ocean Resort.
“Until Luxor receives interim licensing approvals, anticipated to be within approximately 90-120 days, a trust will be created for the purpose of holding the shares of the parent entity to AC Ocean Walk,” the press release added. “A trustee, who will be appointed upon closing of the $70 million investment, will oversee this trust until Luxor receives its interim authorization, at which point the trustee will be removed. Ocean Resort Casino expects no operational effects from the temporary existence of the trust.”
The Casino Was a Originally a Complete Failure
Ocean Resort Casino has a short and shitty history. It was originally Revel, massive, shimmering glass and steel resort built for the cost of $2.4 billion to try to rival the Borgata in Atlantic City. After multiple balks during the construction process (cost-related, if it wasn’t obvious), Revel opened on April 2, 2012. It could never make enough money to keep up with the cash it had drained and closed just two and a half years later, on September 2, 2014.
The property was immediately put on the auction block and got one bid by the September 23 deadline, from Polo North Country Club’s Glen Straub. Straub bid $90 million (that’s “million,” not “billion”), but got pissed when the auction was extended for a week, as he believed his bid was used as a stalking horse, or essentially the big that sets a floor for other bids.
He upped it by a few million, but in the middle of the night on September 30th, Brookfield US Holdings bid $110 million, which was accepted by Revel. Straub lost it, complaining that he didn’t bring medication he needed because he didn’t think he would be Atlantic City for as long as he was. He also tried to make people believe that he didn’t really want the Revel, anyway.
In November, Brookfield backed out over a financial deal Revel had made with the power plant next door. Thus, in January 2015, a bankruptcy judge awarded the Revel to Straub. But… Revel tenants complained that the court told Straub that he could cancel existing contracts. The tenants appealed the ruling and an appeals-court judge reversed the decision. When Straub asked the bankruptcy court for an extension to rework the deal, he was denied, and the sale fell apart again.
In April 2015, Straub finally bought the Revel for $82 million. He had all sorts of insane plans. From The Press of Atlantic City, “… he wants to 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.”
Revel was renamed TEN in September 2017, but never reopened. In January 2018, Straub sold it to Denver developed Bruce Deifik for $200 million. Deifik and his company put all sorts of money into the property, reopening it as Ocean Resort Casino in June 2018, the same day as the former Trump Taj Mahal reopened as Hard Rock Atlantic City.
“We are incredibly proud of the progress our team members have made in establishing Ocean Resort Casino as one of the premier gaming and leisure destinations in the United States,” said Frank Leone, Chief Executive Officer of Ocean Resort Casino, in the press release. “We opened up the property even more effectively to the Boardwalk, and activated retail spaces and food and beverage options that have been extremely well-received by our guests. We are thankful for the support we have received from the broader Atlantic City and New Jersey community and look forward to an exciting 2019.”