Citing the impact of competition from new casinos in Pennsylvania, the owner of Atlantic City's Pier Shops at Caesars today said it was no longer able to pay the $135 million mortgage on the luxury Boardwalk shopping mall.
Taubman Centers Inc., said it would write down the value of the Pier Shops by $106 million to $111 million and immediately enter discussions with its lender.
The Pier's book value would drop to $52 million under the arrangement approved by its board, said Taubman, which invested $35 million of its own cash into the property.
The Michigan-based company said it would "discontinue its financial support of the center" but was willing to keep managing and leasing the 282,000-square-foot mall if its lender agreed.
The recession and competition from new gambling sites in Pennsylvania had siphoned away shoppers from the mall, which opened to great fanfare in 2006 as a glitzy jewel attached to the Caesars casino, the company said.
"In the past year, traffic has not met expectations due to a weakened economy and the challenges of the significant new gaming competition in Pennsylvania," said Robert S. Taubman, chairman, president and chief executive of the Bloomfield Hills-based real estate company.
"This is underscored by the recently released August gaming results," Taubman said, referring to declining revenues at most of Atlantic City's casinos.
Contact Maria Panaritis at 215-854-2431 or mpanaritis@phillynews.com.
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