New York hedge fund Luxor Capital Group LP has reached a deal to sell as much as half of its ownership of Atlantic City’s Ocean Casino Resort to the Ilitch family, whose matriarch, Marian Ilitch, owns one of Detroit’s three commercial casinos.
The amount of the Ilitch organization’s investment into the Boardwalk hotel and casino resort was not disclosed. Under its deal with Luxor, the affluent family, through an affiliate, has agreed to purchase up to a half of the fund’s ownership in Ocean.
It is understood that Ilitch has submitted an application with New Jersey gambling regulators for interim approval to own part of the casino complex. The deal is set to close after all necessary regulatory approvals have been cleared.
Ocean opened doors in 2012 as Revel Casino Hotel. The property’s original owners had invested $2.4 billion into building it, but it fell into financial trouble right from the offset and never turned a profit. It closed doors in 2014 after just two years of operation.
Florida businessman Glenn Straub bought the shuttered resort out of bankruptcy in the summer of 2015 and promised to reopen it and make it a profitable property. However, that never happened and he eventually sold it to late Colorado businessman Bruce Deifik in early 2018 in a $200 million deal.
Mr. Deifik reopened the resort in the summer of that year as Ocean Resort Casino. Despite spending $200 million to renovate and upgrade it, the troubled property quickly started to bleeding money.
Luxor, one of its lenders at the time, took ownership of Ocean in early 2019 and renamed it as Ocean Casino Resort soon after that.
A New Chapter
After a comprehensive regulatory review process that took over a year, Luxor obtained final approval from New Jersey regulators to own and operate Ocean in May 2020. Officials at the hedge fund told regulators that they intended to own and run the gambling complex for at least the next 25 years.
Under its new ownership and after another revamp, the property finally began gaining momentum in the competitive Atlantic City casino market. Last year, it ranked sixth out of the city’s nine casinos in terms of overall gaming revenue and third in terms of revenue from in-person gambling on its casino floor.
The resort posted gross operating profit of more than $12 million for the first nine months of 2020 that compared with a $2.5 million loss for the same period a year earlier. It was the only Boardwalk casino not to record a decline in earnings as all nine properties were closed between March and July as part of the measures adopted by New Jersey lawmakers to help abort the spread of the coronavirus.
In a statement announcing the sale of a portion of its ownership of Ocean, Luxor said that, if approved, the Ilitch family’s proposed investment into the property will provide it with access to growth capital and the hedge fund with a strategic partner.
The Ilitch organization said that it “recognizes the success that the team at Ocean has achieved over the past two years and looks forward to working with the Ocean team and building on their accomplishments through continued investment in both the property and the customer experience.”
The family matriarch, Marian Ilitch, currently owns MotorCity Casino Hotel, one of Detroit and Michigan’s three commercial casinos.
Source: Detroit’s Ilitch family buying half of Ocean Casino Resort, The Press of Atlantic City, April 6, 2021