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Former Prime Atlantic City Real Estate to Sell for 70% Off

Posted on August 17th, 2010

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An empty parcel of land that used to be a hot commodity four years ago may now be available at a hugely discounted price. Trying times in Atlantic City’s casinos industry has affected even its real estate business, as a piece of casino land that used to be prime location is now available at 70 percent off. Pinnacle Entertainment, a casino operator based in Las Vegas, is the lot’s seller. The company has revealed that it may be forced to accept offers for the property that used to be where the Sands Casino Hotel at 30 percent of the price it paid in 2006, at $270 million, just to dispose of the property. Tom Kirschbraun, a managing director of the real estate services firm Jones Lang LaSalle that was hired to conduct the sale, said that Pinnacle has to take a substantial loss just to get rid of the property. While it may be thought years ago that Kirschbraun’s firm will just put a “For Sale” sign and the property will be selling like hotcakes, the current situation entails that Jones Lang LaSalle would need to market the property even to foreign buyers, which may include investors from Eastern Europe, Russia and China, all in the hopes that someone will finally buy the property.

Kirschbraun prides his company as having a wide reach globally, so investors can come from any part of the world. He assures that the Atlantic City property will get exposure internationally from the organization. Jones Lang LaSalle has furnished marketing materials to market the land, advertising it as an oceanfront property measuring nearly 20 acres and calls it a “one-of-a-kind asset” situated in the center of the casino district in the Boardwalk. To quote a sales brochure that the real estate firm has published online, “This is the last remaining assemblage of land available along the Boardwalk in Atlantic City. The property represents a unique opportunity to create the premier entertainment destination on the East Coast.”

When Pinnacle Entertainment acquired the site in 2006, the company had envisioned about the same thing as the real estate sales brochures claim currently. In fact, the company had its own intentions of developing the land at that time to a resort casino reminiscent of Las Vegas facilities which would have totaled from $1.5 billion to $2 billion. In October of 2007, Pinnacle had the whole standing facility imploded for the space to be cleared for its project. The weakening of the gambling industry and the economic slump practically killed the entire plan, leaving the land as empty as it was after 2007. Kirschbraun claims that Pinnacle does want to get rid of the property as soon as possible and wants to discontinue any business in Atlantic City, although the latter has not given any exact figures on how much they would sell the property. Jones Lang LaSalle meanwhile has pointed out that a deal would have a price tag with 70 percent of its original price slashed. He said the Pinnacle wants to move on to other markets and the company has been up for sale for a long time already.

Kirschbraun also mentioned that as of the moment, no offers to their office have been made yet. His firm plans to contact companies to gauge interest in the land, such as companies also in the casino industry, as well as other firms like private investment funds and rich Americans, aside from the foreign investors mentioned earlier. Aside from the sale of the property of Pinnacle, other assets have also been up for grabs in Atlantic City. The Trump Marina Hotel Casino Resorts Atlantic City, originally of Donald Trump’s Trump Entertainment Resorts, has been its lenders’ property after the property defaulted on a mortgage in December, and is now for sale. Owners of the Altantic City Hilton Casino Resort, another facility that has been suffering losses, are asking the court for permission to sell it. The biggest property for sale as of the moment is the Revel Casino which has been hanging since the summer after Morgan Stanley, its major financial backer, has backed out of the $2.5 billion resort plan.