Gomes Gaming to Snap Up Atlantic City’s 1,000-Room Resorts Casino Hotel for a Song
- Aug 24, 2010
August 24, 2010
By Barbra Murray, Contributing Editor
Gomes Gaming Inc. is within inches of getting its hands on Resorts Casino Hotel in Atlantic City, N.J. The company has entered into an agreement with RAC Atlantic City Holdings L.L.C. to acquire the 32-year-old gaming property–which carries the distinction of being Atlantic City’s very first casino–for a price far, far below replacement cost.
Sited along the famous Boardwalk, Resorts features two hotel towers accounting for an aggregate 942 guestrooms; a 100,000-square-foot casino; 45,000 square feet of convention and event space including a 1,250-seat theater; 20,000 square feet of retail space; and eight restaurants. Resorts also offers a valuable 10.5 acres of developable land.
Most recently owned by an affiliate Santa Monica, California-based real estate investment firm Colony Capital L.L.C., Resorts fell into the hands of a lender in December 2009. The scenario, so frequently seen as the credit markets froze and the gaming industry went on a recession-induced downturn, is documented in a report submitted to the New Jersey Casino Control Commission. Colony had defaulted on its term loan and revolving loan with Column Financial Inc. in late 2008 and, as part of a deed-in-lieu of foreclosure agreement, ownership of the property was conveyed to RAC Atlantic City Holdings.
While all parties involved in the impending sale of Resorts are remaining mum on just how much Gomes will plunk down for the asset, Gomes spokesperson, Sherry Amos of Sherry Amos and Associates L.L.C., confirmed to CPE that the company will pay less than the $144.8 million Colony Capital L.L.C. paid for it in April 2001. Given the investments made in the casino hotel under Colony Capital’s reign, any figure beneath the 2001 acquisition price marks a steal of a deal. In 2004, Colony Capital spent $125 million to open the 27-story Rendezvous Tower, which accounts for nearly half of the property’s guestrooms and 26,000 square feet of its gaming space.
Resorts, as is the case with other Atlantic City gaming properties, has yet to recover from the ravages of the global financial crisis. However, Dennis C. Gomes, President and CEO of the company, is confident that the casino hotel will soon experience a renaissance like no other. “It is an exciting place with a lot of history and we are going to bring it back to life with even more energy and vitality than it possessed at its creation in 1978,” Gomes noted in a prepared statement. “I promise everyone that it will ultimately be the place to be and to be seen and will be the center of fun and excitement in our fabulous city.”
Gomes has a long history in gaming. In addition to having held the role of manager or CEO of over 14 gaming properties across the country, he has served as Division Chief with the Nevada Gaming Control Board and Chief of Special Investigations for the New Jersey Division of Gaming Enforcement (DGE). Additionally, Gomes has a history with Resorts. When he was with DGE, he oversaw the investigation for the original licensing of the casino property in 1978.
A spectacular recovery of Resorts, or on a broader level, the Atlantic City gaming market, is not a pipe dream, many industry analysts believe. “The revenue trends in the Atlantic City market have been declining in the last two to three years as a result of the economy and increasing competition from surrounding states,” Jacob Oberman, Director of Gaming Research & Analysis with real estate services firm CB Richard Ellis’s Global Gaming Group, told CPE. “But I see some positive things on the horizon including the potential elimination of subsidies for horse racing in New Jersey, and another would be creating a revitalization district for Atlantic City.”
The New Jersey Casino Control Commission has to sign off on the sale of Resorts to Gomes before the transaction can reach completion.