Las Vegas property veteran Bruce Deifik has acquired the former Revel casino in Atlantic City, beginning a new chapter for what has been one of the region’s most notorious real estate debacles of recent years and, perhaps, for the South Jersey Shore resort town itself.
Deifik said in an interview that he closed on the failed 47-story casino resort last week. His Atlantic City venture, AC Ocean Walk, paid $200 million for the property, with plans to reopen it this summer with 1,399 rooms as the Ocean Resort Casino, according to an online release posted later Monday.
Moody’s Investors Service said in a research note last month that the group plans to spend $175 million to ready the property for guests. Built at a cost of $2.4 billion, the resort has been vacant since September 2014, when it closed due to financial troubles after operating for only 2½ years.
“We are incredibly excited that we were able to take advantage of the opportunity to acquire this tremendous property at a time when Atlantic City is seeing great economic strides,” Deifik said in the release.
The casino will employ 2,500 to 3,000 people and feature a gambling area with 100 table games and 2,200 slot machines, the company said. The group is also working to bring back restaurants that had been successful at the property before its closing, while creating “some specialized new venues, including a top Asian noodle bar and a high-end players club,” Deifik said in the release.
The developer faces significant challenges to transform the opaque glass tower into a profitable enterprise. Moody’s said in its note that the project may struggle — at least at first — to attract a big enough slice of Atlantic City’s diminished ranks of casino visitors as it seeks to repay its debts amid competition from other properties. The rating agency’s report was tied to Deifik’s plan to borrow about $255 million to put toward acquisition and renovation costs.
It may also be difficult for the resort to attract visitors to a city that still bears visible signs of past years’ disinvestment, culminating in the closure of five of the Atlantic City’s 12 casinos in 2014 as the spread of gambling in surrounding states decreased the number of visitors to the beach town.
Next to the former Revel is the Showboat Atlantic City, a former casino that maintains a nearly empty ground floor of vacant gaming rooms behind hanging screens, even as the upstairs hotel rooms accommodate guests.
Less than a mile and a half down the Boardwalk, the Trump Plaza Hotel & Casino remains an empty deteriorating hulk, while many of the storefronts at Caesars Atlantic City Hotel & Casino’s former shopping pier, now called the Playground, remain vacant.
Still, the plans to reactivate the former Revel come amid a spate of upbeat developments for the seashore town, including the scheduled reopening this summer of the former Trump Taj Mahal as the Hard Rock Hotel & Casino and the ongoing construction of a new residential campus in the city for Stockton University.
Atlantic City gaming interests are also awaiting a decision from the U.S. Supreme Court that could open the door to betting on sports, a potential source of new revenue for the city’s casinos, and one that Deifik has his eye on.
“With the groundwork for the legalization of sports betting, we foresee a great opportunity to bring a state-of-the-art sports book to a city which caters to a large and diverse sports market,” he said in his company’s release.
Marc H. Pfeiffer, a former New Jersey state and local government official who is now assistant director at Rutgers’ Bloustein Local Government Research Center in New Brunswick, cautioned that the new capacity from the Hard Rock and reborn Revel could overtake demand, diminishing their chances of success and hurting remaining casinos.
But the new properties could also help make Atlantic City seem exciting enough to draw casino visitors from surrounding states, potentially leading to a gaming-market expansion that boosts revenue for schools and other city services and increases regional employment.
“The rising tide can lift everybody, as long as the market expands,” he said
Deifik, now president and chief executive of Denver-based Integrated Properties Inc., picks up on the troubled tenure of Wellington, Fla.-based developer Glenn Straub, who bought the Revel out of bankruptcy for $82 million in April 2015.
Straub’s years as the Revel’s owner were marked by legal bickering with the operator of the casino’s specially built power plant — which plunged the property into darkness until he agreed to buy the facility for $30 million — and with the state Casino Control Commission over whether he needed to obtain a gaming license of his own for the property to be operated as a casino.
Straub’s proposals for the property had ranged from its partial conversion into a “tower of geniuses” working on global problems to an equestrian center where the horses would be housed in the parking garage to a water park.
His company, Polo North Country Club Inc., said in a separate release that he had acquired the resort “to keep and not sell.” He blamed “New Jersey’s buddy system” for the failure to realize his plans for the site.
Polo North said it retains more than 60 other area properties after the casino sale and “will move forward and be a spark for catalyzing positive economic movement in Atlantic City.”
Deifik comes to Atlantic City after a career that included steering American Nevada Co., the property-development division of Henderson, Nev.-based Greenspun Corp., through the Great Recession in one of the nation’s hardest real estate markets.
His current company, Integrated Properties, is the principal owner and managing partner of AC Ocean Walk, according to the venture’s Monday release. Integrated Properties’ past projects include the Hyatt Grand Champions Resort in Palm Spring, Calif., and central Denver’s 16M mixed-use development.
Deifik is also cofounder of Las Vegas-based Fifth Street Gaming LLC, operator of properties including the Downtown Grand Las Vegas, formerly the Lady Luck Hotel & Casino, which is owned by development giant CIM Group, based in Los Angeles.
His new Atlantic City project “is a dream come true,” he said in the release. “Atlantic City is coming back with a vengeance.”
Timeline of a Troubled Resort
April: Revel opens, two years later than planned. The cost: $2.4 billion.
March: Less than one year after opening, Revel files for its first bankruptcy.
November: Revel puts itself up for sale.
June: Revel files for its second bankruptcy.
August: The first bankruptcy auction fails to generate qualified bids.
September: The Revel closes. South Florida developer Glenn Straub offers $90 million.
October: Brookfield Asset Management Inc. outbids Straub in a second auction, offering $110 million.
November: Brookfield abandons the deal.
January: A bankruptcy judge approves a sale to Straub for $95.4 million.
February: Straub decides not to complete purchase by Feb. 9 deadline. Revel terminates the deal.
April: Straub purchases Revel after a bankruptcy judge approves his $82 million bid, which is about 3 cents on the dollar of the resort’s original cost.
April: Days after the Revel’s sale, its electricity provider cuts off power because of a dispute with Straub.
June: Straub announces plans to reopen Revel as a resort with a smaller casino, a water park, and a rope-climbing course.
September: Straub renames Revel as TEN, with a new reopening date of early 2017.
January 8: Las Vegas property veteran Bruce Deifik announces that he purchased the still-shuttered former Revel from Straub.