Press of Atlantic City: Atlantic City is being de-Trumped.
Trump Marina Hotel Casino has been sold off and rebranded as the Golden Nugget Atlantic City. Trump Plaza Hotel and Casino is on the market. The Trump-owned Steel Pier amusement park was unloaded in August for $4.25 million. Trump’s former corporate office and a Trump warehouse are up for sale, too.
The corporate bondholders who took control of the Trump gaming empire last year in a $225 million bankruptcy buyout are acting more like real estate agents than casino owners, selling off the Atlantic City holdings piece by piece.
This monumental shift is occurring at a time when Donald Trump himself says he may be too busy with other investments around the world and his reality TV show “The Apprentice” to focus on Atlantic City.
Donald Trump has been synonymous with the Atlantic City market since the 1980s. For the time being, his famous name is emblazoned on two casinos. However, Trump was rendered only a 10-percent owner of the restructured Trump Entertainment Resorts Inc. in a bankruptcy deal with bondholders led by billionaire hedge fund manager Marc Lasry of New York-based Avenue Capital Group.
“I think it’s being run very properly,” Trump said, giving his approval of the company’s new management and ownership. “Marc is a good friend of mine.”
Lasry, who also serves as chairman of the Trump Entertainment board, explained that the company is concentrating on paying down its debt and has no interest in owning noncasino assets such as the Steel Pier, offices or warehouses.
Trump Entertainment ultimately decided that one core asset, Trump Marina, was not worth the investment, so the money-losing casino was sold in May to Golden Nugget’s Houston-based parent company, Landry’s Inc., for $38 million.
Next up is Trump Plaza, which is struggling to wring out a profit in Atlantic City’s slumping market. The company is considering two options: selling the Plaza or sinking millions into the aging property to make it more competitive with its rivals. No final decision has been made, Lasry said.
The Plaza’s strength is its location in the heart of the Boardwalk, at the foot of the Atlantic City Expressway entrance. Next door is Boardwalk Hall, the city’s main sports and entertainment venue. Major events at Boardwalk Hall usually mean that Trump Plaza benefits by having sports fans and concertgoers stop in for some gambling action after seeing a show.
“I think the Plaza has the best location on the strip. But I think with the Plaza, you’d rather there was a different layout,”Lasry said of the need to modernize the 1980s-era casino.
Lasry estimated the sales price for Trump Plaza is in the $50 million to $75 million range. He said the company continues to talk to prospective buyers, but no deadline has been set for selling the casino if Trump Entertainment goes that route.
At the same time that the company is thinking of selling the Plaza, it also may consider buying property next door that would provide more room for the casino’s expansion if renovations are done.
The family of longtime Trump nemesis Vera Coking has put the elderly widow’s former boarding home up for sale for nearly $5 million. The building is the last piece of property not owned by Trump Plaza on the block of Columbia Place and Pacific Avenue. For years, Coking steadfastly held out while Donald Trump tried to buy her property.
“We’re the best buyer,” Lasry said. “We’d love to buy it, but not at the price she wants.”
Stephen N. Frankel, a Ventnor real estate agent who is handling the property sale, said the Coking family has instructed him not to talk to the media.
One possibility is for Trump to bring in a joint development partner to invest in renovations. If Trump Entertainment decides to spruce up the Plaza, the Trump name may not stay on the building. Lasry said no decision has been made.
Interestingly, it was the perceived value of the Trump name that was the deciding factor in the bankruptcy battle for control of the Trump casinos. The bondholders backed by Donald Trump fought it out with corporate takeover specialist Carl Icahn. Unlike the bondholders, Icahn did not have an agreement with Trump to continue using the Trump name on the casinos.
In a 121-page ruling made in April 2010, U.S. Bankruptcy Court Judge Judith H. Wizmur concluded that the Trump brand was worth millions of dollars to the casinos and helped to “tilt the balance”in favor of the bondholders over Icahn.
Now, a year and a half later, the Trump name is fading from the Atlantic City skyline.
Trump Marina was the first to go. Next, the Steel Pier was sold to an investment group that includes acclaimed Las Vegas architect Paul Steelman and brothers Anthony, William and Charles Catanoso, who operated the Boardwalk amusement park for 20 years under a Trump lease.
Trump Entertainment is asking $4.7 million for the corporate office building, a 1920s-era firehouse on Pennsylvania Avenue. The Trump warehouse, located in Egg Harbor Township, is on the market for $3.3 million.
The only Trump asset that seems safe from a sale is the flagship Trump Taj Mahal Casino Resort. One gaming analyst suggested that Trump Entertainment devote its energy and resources to the Taj Mahal instead of diluting the Trump brand with too many casino properties.
“A decade ago, we raised a very legitimate question: Is it good to have the Trump name on so many projects in one market?” said Michael Pollock, managing director of Spectrum Gaming Group, a casino consulting firm based in Linwood.
“With one asset they can focus on, there is a silver lining here,” Pollock said of the Taj Mahal.
Longer-range plans may include spreading the Trump casino brand outside Atlantic City. Lasry said Trump Entertainment hopes to diversify by buying distressed casinos in other markets, although he declined to divulge where.
But the Atlantic City market is looking less and less like a candidate for the company’s expansion. Since the bondholders took over and made Bob Griffin the new chief executive officer, the company has slashed its work force and been frugal with its investments.
Employment figures for July compiled by the New Jersey Casino Control Commission show the Taj Mahal and Trump Plaza’s combined work force has been reduced 20 percent over the past year, from 6,630 to 5,285.
Entertainment also is being scaled back. The Taj’s 5,000-seat concert and sports venue, the Etess Arena, has been dark most of the summer. Cuts in the Taj’s entertainment lineup in the past 18 months have meant less work for members of Local 917 of the International Alliance of Theatrical Stage Employees, the union said.
Entertainment is considered a key part of the mix of nongaming attractions expected to boost Atlantic City as it fights for customers.
“Atlantic City is a different place but is still a place with a wonderful future,” Trump said. “But they have to get their act together because they don’t have competition like in the old days. They didn’t have competition then. Las Vegas was our competition. Now, the competition is all over.”
Lasry said the bondholders recognized the risks of the Atlantic City market and knew it would be a tough investment when they bought the company. But even they were stunned by the severity of the downturn, he added.
“I think we mistimed it,” he said. “It would have been better to come in six months later. We thought we would be able to generate money and turn things around because we had a successful management team. I think the part that caught us by surprise is how hard Atlantic City has been hit.”
Still, the investors will be patient and have no plans to unload the entire company in a panic sale, Lasry said. The company will continue to pay down its $305 million debt as part of its strategy moving forward.
“I think that when we did the deal, we thought it would be a three- to five-year play. Now, a year and a half later, it’s still a three- to five-year play,” Lasry said.