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 Nearly seven months after the latest attempt to sell Trump Entertainment Resorts Inc. fell apart, Trump Entertainment has another deal: plans to sell the Trump Marina Hotel Casino in Atlantic City to Coastal Marina LLC, an affiliate of Coastal Development LLC, for $316 million.
Affiliated with Jimmy Buffett's "Margaritaville," Coastal Marina said it would "rebrand and refurbish" the property under the brand. Trump Entertainment, its chief executive said, is also weighing other options to improve its financial footing, including cutting debt, as well as further development in Atlantic City and elsewhere. The news comes weeks after the Newark Star-Ledger reported any of the Atlantic City casinos could be sold if the right deal came along, according to comments from CEO Mark Juliano. CLEANING HOUSE In a Deal newsweekly article Nov. 19, The Deal's Matt Miller checks in with what The Donald has been up to lately, including a new take on the smelliest of projects.While the housing slump does offer a slight reprove from the continued build out of outlying suburbs as housing closer to cities has become somewhat affordable, some developers still see fresh opportunity. He writes: "Developers are bound to grab land from desperate banks and gullible governments and resurrect ridiculous developments. Consider New Jersey and California, where another force is at work: The Donald." Earlier in November, Miller points out, Trump signed off on a 50-50 joint venture with a private equity fund to redevelop toxic dumps in New Jersey's Meadowlands. The project, which initially got underway in 1999 with EnCap Golf Holdings LLC, owned by Raleigh, N.C.-based "brownfield developer" Cherokee Investment Partners, was slated to have two golf courses and 2,500 residences. The new JV excludes EnCap, which The New Jersey Meadowlands Commission found in default, and which, a source told Miller, not only failed to clean up the site, but made it worse. EnCap filed for Chapter 11 May 8, 2008.Trump has also been active on the other coast. After a Fresno, Calif., golf and residential development called Running Horse went belly up in April 2007, followed by the loss of its automatic stay in bankruptcy protection and subsequent foreclosures, Trump put forth an offer. Miller writes:
FALSE START The latest effort to sell Trump Entertainment Resorts Inc. fell apart, The Star-Ledger said Nov. 2. Trump Resorts had been in talks with Baltimore developer Cordish Co. until Goldman, Sachs & Co., its lender, balked, the paper said. The last attempt went bust in July. Trump Entertainment, which operates the Trump Taj Mahal, Trump Plaza and Trump Marina, said in a statement it had called off talks with potential acquirers, which published reports pegged to be a private equity partnership headed by Atlantic City casino exec David Gomes and real estate developer Morris Bailey and another bidder, hedge fund Dune Capital Management LP. Reports said the company sought offers in the $2.2 billion range, or $22 per share, while the Gomes team reportedly offered less than $17 per share. TER, which has over the years weathered several financial storms, announced in March that it had hired Merrill Lynch & Co. to review its strategic options. TER decided against selling the casinos this summer and instead, set out to focus on its previous strategic plan in an effort to shed expenses, the company's interim CEO told The Deal's Ben Fidler. Analysts at the time chalked up the deal's failure to several factors, including TER's complex ownership, timing and competition from New York and Pennsylvania and smoking restrictions in Atlantic City, as well as other Atlantic City heavyweights like Borgata Hotel Casino & Spa and Harrah's Entertainment Inc.'s properties. One suggested that as it reviews options, TER will eventually need more capital either through a joint venture or equity infusion. And aside from recent credit market turmoil, The Star-Ledger points out, the buy is an expensive proposition, with $1.5 billion in debt. HOT PROPERTY The failed sale this summer came at a time when casino M&A activity had been particularly hot.
KEEPING ON News of the stalled auction came days after Trump submitted a new letter of intent to pay $40 million for unfinished, bankrupt California development Running Horse LLC, days after saying on a California radio show he was no longer in the bidding. Running Horse filed for Chapter 11 on April 27 in Fresno, where its property spans about 435 acres and has been mentioned as a possible venue for a PGA event in October. Financial constraints by the land's original owners left the property unfinished. The two have reportedly been in talks for weeks, since Trump put forth a $10 million bid, though the property's attorney told The Deal an open auction will ensue. Earlier this year, Trump, whose holdings range from golf clubs and resorts to casinos, luxury properties and skating rinks, many of which carry his name, announced his latest international development, at the Dominican Republic's Cap Cana in February; unveiled plans to expand his Trump Ocean Resort in Baja in April; and broke ground on a luxury condominium complex in downtown Stamford, Conn., in May. In 2005, Trump and his Hong Kong-based partners sold TV City, a residential property on Manhattan's Upper West Side, for $1.76 billion to Extell Development Co. and the Carlyle Group, marking the then-largest residential real estate transaction in the city and flipping a property they paid a mere $82 million for 11 years earlier.
A FAMILIAR TUNE The TV City sale and subsequent Bank of America Center deal came just months after Trump's New Jersey casinos emerged from bankruptcy protection for the second time. Laden with debt, Trump's Atlantic City casinos first filed for Chapter 11 protection in 1992. Trump later regained control of the properties, and twelve years later, the company again sought protection.
--Carolyn Murphy
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