Wednesday, January 09, 2008

Colony Offers $850M for Trop

Check out the latest article from The Press of Atlantic City on the selling of the Tropicana.

LATEST NEWS: Colony Capital makes $850M. offer for Tropicana
By DONALD WITTKOWSKI Staff Writer, 609-272-7258
Published: Wednesday, January 9, 2008

ATLANTIC CITY - Colony Capital LLC, a private real estate investment firm that already owns two Atlantic City gaming halls, has made an $850 million cash offer for the troubled Tropicana Casino and Resort.

Los Angeles-based Colony expressed its interest in a letter to Gary S. Stein, a former New Jersey Supreme Court justice who is overseeing Tropicana's sale in his role as a state-appointed conservator.

Colony spokeswoman Lisa Baker declined to comment Wednesday night. Other company representatives in Los Angeles and New York could not be reached. The Press of Atlantic City learned of the offer from people familiar with Colony's letter.

The Atlantic City Hilton Casino Resort and sister property Resorts Atlantic City are owned by Colony affiliates. Colony tried to acquire Tropicana in 2006 but was outbid by Kentucky-based Columbia Sussex Corp. in a $2.75 billion takeover of Tropicana casinos in Atlantic City and Las Vegas formerly owned by Aztar Corp.

Columbia Sussex, in turn, was denied a new gaming license Dec. 12 by the state Casino Control Commission following a disastrous 11-month reign that included mass job cuts, regulatory violations and complaints of unsanitary conditions and poor customer service. The commission appointed Stein to take charge until the casino is sold.

Interest in Tropicana has intensified in the last two weeks as potential bidders have begun jockeying for position. Connecticut's Mohegan Sun casino is looking at Tropicana as part of its East Coast expansion plans. In addition, a private investment group headed by New Jersey real estate developer Curtis Bashaw and former Atlantic City gaming executive Wallace R. Barr has confirmed it may make a bid for Tropicana.

As owner of two of Atlantic City's smaller casinos, Colony Capital reportedly has been shopping for a large property that would transform it into a major player in the country's second-largest gaming market.

The sprawling Tropicana has 2,129 hotel rooms, 3,400 slot machines and about 150,000 square feet of casino space. However, the aging casino floor and hotel towers are badly in need of renovation to complement Tropicana's tourist-friendly retail and entertainment complex known as The Quarter.

Gaming analysts have estimated Tropicana will fetch between $800 million and $1 billion in an auction. Colony's offer suggests a minimum of $850 million. The buyer likely will have to spend a few hundred million dollars more to refurbish the 27-year-old property.

Other possible bidders include Pinnacle Entertainment Inc., Ameristar Casinos, Penn National Gaming and Crown Ltd., a gaming company headed by billionaire James Packer, Australia's richest man, according to analysts.

One private group seen as a likely bidder is Gomes + Cordish Gaming Management LLC, a newly formed partnership between Dennis Gomes and Baltimore-based retail developer Cordish Co. Gomes was Tropicana's chief executive when it was owned by Aztar, while Cordish is the developer of an Atlantic City shopping and entertainment district known as The Walk.

Founded in 1991 by Thomas J. Barrack Jr., Colony Capital has about $36 billion in real estate and casino holdings worldwide. Colony bought Resorts Atlantic City in 2001 for $140 million. It acquired the Hilton in 2005 as part of a $1.24 billion deal with Caesars Entertainment Inc. and Harrah's Entertainment Inc. for four casinos in New Jersey, Mississippi and Indiana.

To e-mail Donald Wittkowski at The Press:

1 comment:

Freddie B said...

Regardless of who owns it, and despite the disgusting old uncleaned hotel rooms, the Trop is my favorite place to play in the world, not just AC.

Trop has the worst players I have ever seen (the best opponents, from my perspective).

I cannot think of any explanation for why terrible players go there to lose their money (while fewer go to Borgata, Taj, etc.) but it seems true, to an extent. Of course, I have seen bad players everywhere, but it is a numbers thing. I rarely lose there, yet seem to typically break even or lose at Borgata, Taj, etc.

Anybody have a theory as to why bad players go to one place in droves, or why I would win at Trop more consistently than elsewhere? Maybe it is the extremely loud announcement system that distracts everybody during hands. Perhaps the lighting?

Maybe I just play there more often and if I played more often elsewhere I would win at that other place in the long run -- just need a bigger sample of time at the other places to see the long term results. I go there often due to the the low hotel rate for poker players.

Believe me I am no donkey myself, so that is not an explanation for the non-Trop non-wins. A donkey would not admit his losing occasions. A donkey cannot see the holes in his game. I know I have holes and I seek to fill them.


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