Ocean Resort Casino Will Get $70 Million From New Owner Luxor Capital
It has been no secret that in the seven months since Ocean Resort Casino opened on the Atlantic City Boardwalk on the site of the former Revel Casino Hotel, the property has been struggling.
So when the resort’s former principal owner Bruce Deifik announced on Jan. 10 that he was transferring primary ownership to another party, the news was not surprising.
However, he did not disclose as to whom the new principal owner would be. That changed earlier this week with the announcement that a New York hedge fund would assume control of the AC casino.
Early revenue far short of projections
Ocean Resort Casino’s opening — on June 27 — coincided with that of its neighbor, Hard Rock Atlantic City. Therefore, it should have been able to capitalize a lot more than it did both on the peak summer season and spillover from Hard Rock.
However, attendance has been disappointing. Also, revenue so far has been far short of the figures that the resort originally projected in the licensing hearing before the Casino Control Commission.
Chief Financial Officer Allan Greenstein told the commission that the resort anticipated receiving a 10.5 percent of the market during its first year of operation, including $292 million in gambling revenue and $121 million in non-gaming revenue.
Its total gambling revenue for the six months it was open in 2018, including the peak months of July and August, was only $101 million. But $8.4 million of that total was not from casino gambling at all, but it was from Ocean Resort Sportsbook.
Furthermore, when compared to Atlantic City’s other eight casinos, the monthly revenue for Ocean Resort has consistently ranked at or near the bottom. August and November were the only two months when Ocean Resort Casino was open that it wasn’t ranked last.
The new owner now identified as Luxor Capital Group
On Jan. 28, the identity of the company taking over control of Ocean Resort Casino was finally revealed. It is Luxor Capital Group, a New York-based private investment firm. Luxor has committed to invest $70 million in property enhancements.
Meanwhile, Deifik will retain no ownership of the casino at all, according to the Associated Press.
Luxor helped with original financing for Ocean Resort
This is not Luxor Capital Group’s first investment in Ocean Resort Casino. The company was also a major contributor to the initial financing.
The $2.4 billion Revel only lasted two years before it closed permanently in September 2014.
Then, the following April, Glenn Straub purchased the vacant property for only $82 million. However, other than renaming it TEN, he did nothing with it. Despite multiple promises to renovate it and reopen, the reopening never happened.
Finally, in January 2019, Colorado-based real estate developer Deifik purchased the property from Straub, sight unseen, for $229 million.
The purchase was made possible as a result of financing from two major sources: JP Morgan Chase and Luxor Capital Group. The initial loan from Chase was for $110 million. The loan from Luxor was for $122.5 million.
Then, in June 2018, Deifik borrowed another $175 million from Chase to pay off the first bank loan.
Now Luxor has agreed to help Ocean Resort Casino further with a new $70 million investment in the property.
Luxor Capital Group’s background
Luxor Capital Group was founded in 2002 by Christian Leone (no relation to Ocean Resort CEO Frank Leone). The company reports approximately $3.2 billion in assets.
It has no current or past relationship with the Luxor Hotel and Casino in Las Vegas.
What will happen next
The new deal with Luxor is expected to close in the early part of February. This is pending the receipt of the necessary regulatory approvals and final documentation.
Then, once the investment is approved, Luxor will need to undergo the standard licensing process required of all NJ casino operators. For now, Deifik’s company, AC Ocean Walk, is still the casino’s license holder.
Interim licensing approval is expected to take from 90 to 120 days. Meanwhile, Luxor’s $70 million investment will be held in trust. A specially appointed trustee will temporarily oversee the trust until Luxor receives its interim authorization.
According to The Press of Atlantic City, Ocean Resort Casino expects no changes in operations stemming from the temporary existence of the trust.
Long-term plans at the AC casino
Assuming the deal is finalized, and Luxor Capital Group gets a license, Luxor will use the $70 million it is investing in Ocean Resort Casino to make significant enhancements in the property.
Specific improvements mentioned so far include all of the following:
- Opening a buffet
- Additional suites and rooms
- Enhancements to the casino floor (specifics not indicated)
- A substantial increase in entertainment programming and player events
Presumably, these much-needed enhancements will occur in 2019. However, projected dates, like when the buffet is expected to open, have yet to be announced.
Here at NJ Gambling Websites, we will stay on top of this important developing story and keep you posted on all of the latest news as it happens.