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Press of Atlantic City - September 2, 2010
Gomes, N.Y. real estate mogul reveal details of $35M. Resorts casino purchase in Atlantic City
By DONALD WITTKOWSKI Staff Writer | Posted: Thursday, September 2, 2010
ATLANTIC CITY - All of the secrecy surrounding the sale price of Resorts Atlantic City ended Wednesday when the buyers revealed it was $35 million.
In another major development, it was announced that New York real estate mogul Morris Bailey has teamed with former Atlantic City and Las Vegas gaming executive Dennis Gomes to purchase Atlantic City's oldest casino.
Previously, only Gomes had been mentioned as the buyer. Gomes had declined to disclose any terms of the deal since it was first announced Aug. 23, but he and Bailey confirmed the price was $35 million during an interview Wednesday with The Press of Atlantic City.
"This property that we bought is of extraordinary value," Bailey said. "It was the type of value that was compelling, to put it mildly."
Bailey and Gomes are buying Resorts from lenders who had taken control in December after the casino defaulted on its $360 million mortgage and faced possible foreclosure. The casino hotel complex includes 100,000 square feet of gaming space, 942 guest rooms and 10.5 acres of adjacent, undeveloped oceanfront land.
The purchase price reflects Atlantic City's depressed real estate market in the sluggish economy. Nine years ago, the private real estate investment firm Colony Capital LLC bought Resorts for $140 million from Sun International Hotels. In 1996, Sun International paid $301 million to buy the casino from celebrity CEO and "Jeopardy" creator Merv Griffin. Colony's reign ended when it surrendered ownership to the lenders in December.
The sale to Gomes and Bailey is pending regulatory approval by the New Jersey Casino Control Commission, a process expected to take about four months to complete.
"I realized instantly it was the best buy of the century," Gomes said of Resorts.
With Bailey's financial backing, the 65-year-old Gomes is finally on the verge of acquiring an Atlantic City casino, after falling short in previous attempts to buy Trump Entertainment Resorts Inc. and Tropicana Casino and Resort. Gomes, of Margate, once served as a top executive at Trump Taj Mahal Casino Resort and the Tropicana.
Bailey, 72, who was born in Atlantic City and now lives in Brooklyn, heads the New York-based development firm JEMB Realty Corp. The company oversees about $4 billion in assets, including hotels, residential buildings, commercial office space and the Pocono Manor Inn & Golf Resort in Pennsylvania.
Gomes and Bailey are taking over a casino that suffered an $18 million operating loss in 2009 and has lost $10.8 million so far this year. Their turnaround strategy includes bringing more entertainment and high-end restaurants to Resorts to complement the gambling action.
"You have to create a fun environment," Bailey said. "What we plan to do is to bring in the top people to create the excitement that is required and identify how we set a different tone and image for that building."
Bailey estimated it will take about a year before Resorts is profitable, although he joked that Gomes is shooting for only one month. Resorts' return to a money-making operation will depend on capital improvements to transform the aging complex into something more attractive.
"I will tell you that we have to spend money to reposition those areas for entertainment and dining," Bailey said, not specifying how much he intends to invest.
Longer term, Bailey and Gomes may use the 10.5 acres of vacant land for expansion plans. Resorts' previous owners talked about redeveloping the same property, but their plans never materialized.
"That land itself is spectacular," Bailey said. "As a real estate guy looking at that property that I just bought, it is of tremendous value. I just think that when the market recovers, we'll have a lot of options for what to do on that land. We're going to wait on that."
The Resorts deal is not the first venture between Gomes and Bailey. They originally tried to convert Bailey's Pocono Manor Inn & Golf Resort into a slots parlor in 2006, but did not win a Pennsylvania gaming license. After they explored the Pennsylvania gaming market, they mounted an unsuccessful attempt in 2007 to buy the three Trump Entertainment Resorts casinos.
More recently, they had some interest in buying Trump Marina Hotel Casino, but backed off while parent company Trump Entertainment was restructuring its finances under Chapter 11 bankruptcy protection, Bailey said.
Contact Donald Wittkowski
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