This is the third company rumored to be buying Revel Casino, but it is the first time Moody’s reported a sale.
Moody’s Investor Service confirmed in a report that the Revel Casino has been sold to AC Ocean Walk LLC out of Colorado for $200 million. When the 47-story skyscraper was built prior to its opening in 2012, it cost $2.4 billion.
AC Ocean Walk LLC paid $200 million to Glenn Straub, the Florida real estate developer who bought the Revel Building in a bankruptcy auction in 2015. The remaining $175 million is planned for a renovation of the building, which has sat empty since it closed in September 2014. The plan is to open the casino as soon as May 2018.
Glenn Straub, the owner of Polo North, spent $82 million on his purchase — roughly 5% of the original cost. Since that time, Glenn Straub spent $30 million to buy out the building’s electricity supplier, ACR Energy Partners.
Straub Pockets $80mil on 3-Year Investment
Straub also spent a few million dollars on property taxes and PILOT payments, so he might have invested a total of $120 million to $125 million all-total on the Revel Casino. If he sells for $200 million, he stands to gain a profit of $75 million to $80 million by flipping the skyscraper a little over 2 and 1/2 years after he bought the property.
During the time he owned Revel Casino, Glenn Straub complained that he could not open for business, because he never could procure a gambling license or alcohol license. At one time in June 2016, Straub planned to open 500 rooms of the Revel Build. At the time, he renamed the property to TEN Casino.
Failed Revel Casino Grand Openings
In June 2017, Straub planned a second time to open the resort’s hotel. Once again, he was unable to obtain an alcohol license, making a hotel unfeasible. By that time, Glenn Straub was suing state agencies for a variety of reasons, while refusing to pay the 2017 PILOT bill. His relationship with New Jersey regulators could be described as toxic.
When the Moody’s report circulated on Monday, Glenn Straub did not confirm the sale. He had denied reports of sales before, but those involved newspaper and other media groups. In the past, early reports of the casino’s sale have proven false.
Moody’s Investor Service is one of the leading financial rating services in the world, so the reports this time likely are true.
AC OCean Walk: Terms of the Loan
Moody’s assigned a B3 Corporate Family ratoing to the second lien term loan AC Ocean Walk LLC took to buy the Revel Casino. That includes a B2 rating to the $175 million 5-year first lien term loan and a Caa2 rating to the 5.5-year, $75 million second lien PIK term loan.
The proposed term loans are designed to finance the acquisition of AC Ocean Walk, formerly known as Revel Atlantic City. $125 million of the common equity goes to finance the $200 million purchase. Another $56 million will go to pre-opening, while yet another $68 million is planned for consumable inventorires, gaming chips, and the cage cash. Another $25 million is planned as an interest reserve, while $26 million more will be used as working capital for fees and other expenses.
AC Ocean Walk LLC
If AC Ocean Walk LLC has better success gaining licensing than Polo North did, then it sits on a potentially lucrative gaming and non-gaming operation. When it opened in 2012, one prominent architect called the Revel Building the most beautiful skyscraper on America’s east coast.
The Revel Casino is a 6.3 million square foot complex. Revel has a total of 1,399 hotel guest rooms and suites, along with 3 nightclubs and 13 restaurants. The resort was designed to be a Las Vegas style integrated resort-casino, so the luxurious building also includes 55,000 square feet of retail space. The Revel Building’s gaming space includes 100 gaming tables and 2,000 slot machines.
Revel Casino’s Sad Legacy
Despite the opulence, Revel Casino was a financial failure from Day One. The casino, which was planned before the 2008-2009 Global Recession, was ambitious — too ambitious for the lean years which were to come. When it opened in 2012, New Jersey was still digging out of the financial pit it faced during the recession. Hurricane Sandy also damaged New Jersey’s local economy, in a time when the casino gambling segment had fractured amidst market saturation.
Unable to rely on the planned-on customer base, Revel Casino had trouble paying the mortgage — or the $3 million-per-month energy costs which ACR Energy Partners insisted on collecting. Eventually, Revel Casino underwent 2 bankruptcies in 29 months. When the second bankruptcy happened, Revel Entertainment closed the resort. Revel Casino’s most famous moment came in February 2014, when former Baltimore Ravens’ running back Ray Rice had a fateful domestic incident in Revel’s elevator.
Glenn Straub: Wiley Investor
Glenn Straub bought the casino out of bankruptcy, but not before several controversies over the bankruptcy auction process. Straub filed several lawsuits after taking control of the Revel Casino, either to cast tenants out of the property or to secure avoid payments to his energy supplier. Through it all, his plans for the building seemed nebulous, prompting some to believe he was trying to flip the building.
