Revel casino worth a fraction of its cost, union says

The Revel casino is seen Thursday, Feb. 14, 2013, in Atlantic City. (AP Photo/Mel Evans)

Revel Casino Hotel in Atlantic City, built for $2.4 billion, is worth $25 million to $73 million, according to estimates by Unite Here, a hospitality workers union that represents casino workers in Atlantic City and across the country.

The union resorted to estimating Revel's value based on land values and on the value of hotel rooms, because the property is unlikely to be profitable for many years, making it impossible to use traditional metrics to estimate a sale price.

Land values in recent Atlantic City casino sales ranged from $1.25 million to $2.71 million an acre. Hotel rooms were valued at $28,925 to $52,198 per key, the report said.

Revel sits on 20 acres and has 1,399 rooms. Based on land values, the Revel is worth between $25 million and $54.2 million, according to Unite's figures. Based on hotel rooms, Revel's value is between $40 million and $73 million.

The union also tallied the value of Revel's equity - excluding debt - based on regulatory filings by Revel's second-largest shareholders, Capital Group.

As of Jan. 31, Capital valued its shares in Revel at $1.27 each. That translates to a value of just $10 million for all of Revel's shares, according to the report by Ben Begleiter, a research analyst for Unite.

At the end of June, Revel's equity was valued at $393.68 million, based on Capital's value for its shares, the report said.

Revel also has $383 million in debt, the report said. The debt would take a significant haircut, but would have some value in a sale.

After emerging from bankruptcy last May, Revel continued to struggle. The casino had an operating loss of $130.24 million on net revenue of $189.71 million in 2013, according to figures released Monday by the New Jersey Division of Gaming Enforcement.

Unite does not represent workers at Revel, but it has been trying to organize them.