In a sign of just how much value casinos in the nation's second-largest gambling market have lost in recent years, Trump Entertainment Resorts agreed Monday to sell its Trump Marina Hotel Casino to the Texas-based parent company of the Golden Nugget Las Vegas and Laughlin for $38 million.
That's about a tenth of what Trump Entertainment was offering the casino for in 2008.
Landry's Inc., a Houston casino and restaurant company that recently abandoned its bid for the struggling Atlantic City Hilton Casino Resort, plans to invest significantly in the Trump Marina and rebrand it as a Golden Nugget.
"Our plan is to transform the Trump Marina into a luxurious and exciting hotel and casino with the highest level of service," said Tilman Fertitta, Landry's chairman, president and CEO. "It's going to be great. We're really excited about it."
All 11 casinos in Atlantic City have struggled the past four years with the loss of nearly one-third of their business to the poor economy and new casinos in neighboring states.
The deal brings the Golden Nugget brand back to Atlantic City, where it operated in a different building from 1980 to 1987.
"It's still a $3 billion-plus market," Fertitta said. "We wanted an East Coast presence. It's a large property, built in the 1980s with high ceilings and big spaces. We really didn't have that kind of space at the AC Hilton."
The sale leaves Trump Entertainment Resorts, which emerged last summer from its third stint in bankruptcy court, with two Boardwalk casinos -- its flagship trump Taj Mahal Casino Resort and the older Trump Plaza Hotel and Casino.
Trump Marina is located in the city's marina district, next to the Frank Farley Marina, which is included in the sale, and two of the city's top-performing casinos — the Borgata Hotel Casino & Spa and Harrah's Resort Atlantic City.
Donald Trump, who owns 10 percent of the casino company that bears his name, termed the deal "a wonderful transaction for the company and the buyer." Trump Entertainment Resorts said it will use the proceeds to chip away at its debt, which was substantially reduced in the bankruptcy proceedings.
Trump Entertainment has been trying to sell the Marina casino since May 2008, when it struck a deal with Coastal Marina LLC, run by former Donald Trump protege Richard Fields. Fields first agreed to pay $316 million. After the economy tanked, Trump and Coastal Marina agreed to a lower price of $270 million, but the deal fell apart in June 2009 over disagreements about the physical condition of the casino.
Coastal claimed that summer that the Trump Marina needs at least $50 million in repairs. Things were so bad, Coastal Marina claimed in a lawsuit, the casino was putting plants under leaky windows and skylights to catch the drips when it rained rather than fix the leaks.
Fertitta said he was not concerned by the allegations in the lawsuit, adding that his company's renovation plans far exceed what Coastal envisioned.
"It's going to take a lot more than $50 million," he said in a telephone interview. "We're going to redo everything. You will not recognize this place when we're done with it."
Landry's plans new bars and lounges, live entertainment, stores and updated rooms and suites. Attractions including "the high-energy Rush Lounge and a unique new After Hours" will complement a new spa, poker room, race and keno room and a new H2O Pool and Lounge, which will introduce all-season hot tubs and fire pits.
Fertitta said his company will start some renovations immediately, before New Jersey casino regulators approve the sale. That's a sign of how confident his company is of getting approval, he said. A spokesman for the New Jersey Casino Control Commission said a hearing has not yet been scheduled.
The discounted price is in line with the new market valuations for distressed casinos in Atlantic City. In December, Resorts Atlantic City — the nation's first modern casino outside Nevada — was sold for $31.5 million.
This latest deal highlights the difficulty that Revel Entertainment is having coming up with the $1 billion or more that it needs to complete its casino on the Boardwalk, which already has cost $1 billion. Revel was trying to finalize that financing Monday.
"We feel we bought it just right for what it's worth in the market," Fertitta said of Trump Marina. "We feel very comfortable."
The Golden Nugget and the Las Vegas and Laughlin Golden Nuggets all will honor Trump Marina customer points and rewards after the Atlantic City resort is rebranded, Fertitta said.
The acquisition is expected to close in the second quarter, and the renovations should be complete by the end of the year.
In addition to the Golden Nugget casinos, Landry's owns and runs more than 300 stores and restaurants including the Rainforest Cafe and Chart House chains. It also owns the Downtown Aquarium complexes in Houston and Denver, as well as the Kemah Boardwalk, a 50-acre, family-oriented themed entertainment destination outside Houston.
Landry's shareholders in October approved Fertitta's bid to take the company private by purchasing the portion of that he didn't already own. Fertitta's Landry's Holdings Inc. paid $24.50 per share in a deal valued at about $1.4 billion. He had been trying to take the company private for two years.
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