ATLANTIC CITY - Landry's Inc., an international restaurant and gaming operator, is buying Trump Marina Hotel Casino for $38 million and will rebrand it with the iconic Golden Nugget name.
Tilman J. Fertitta, Landry's chairman, president and chief executive officer, said the Houston-based company will spend $150 million to transform the 1980s-era casino into a luxury resort. Landry's also is making long-range plans to build a new hotel tower. Even the aesthetically challenged exterior of the casino - long ridiculed as looking like a hospital - will be given a facelift.
"It will be totally updated. You won't recognize the property from the second you walk in," Fertitta said in an interview with The Press of Atlantic City after the deal was announced Monday by Landry's and Trump Entertainment Resorts Inc.
The sale, expected to be completed by the second quarter of this year, will bring back the Golden Nugget brand to Atlantic City, although at a different casino. Landry's owns the Golden Nugget casino hotels in Las Vegas and Laughlin, Nev.
Fertitta said Landry's will use its renovation of the Las Vegas Golden Nugget as a model for Trump Marina's makeover. After buying the Las Vegas casino in 2005, Landry's re-energized the then-tired Golden Nugget by adding new entertainment attractions, restaurants and a 500-room hotel tower.
"It's really the last of the old historic gaming brands that still has a good name today," Fertitta said.
Analysts said Landry's should be able to capitalize on the Golden Nugget name, which is still treasured in Atlantic City even though it disappeared 24 years ago when Las Vegas gaming mogul Steve Wynn sold the casino. The former Golden Nugget is now the Atlantic City Hilton Casino Resort.
"The Golden Nugget brand still holds a lot of fond memories in this area," said Michael Pollock, managing director of the Linwood-based casino consulting firm Spectrum Gaming Group. "The Steve Wynn legacy of that brand is still talked about here. That's something we expect Landry's to build on."
David Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas, said Trump Marina is trading one famous name for another.
"On one hand, they do lose the Trump name, which has national cache. But on the other hand, they are getting the Golden Nugget, which is one of great names in gaming," Schwartz said.
The Golden Nugget was Atlantic City's first luxury casino when it opened in 1980 under Wynn's ownership. The Boardwalk property has gone through a series of name changes and owners since Wynn's departure in 1987. Known as the Hilton since 1996, the property defaulted on its mortgage under current owner Colony Capital LLC and has been threatened with foreclosure by its lenders. An investment bank has been hired to sell it.
Landry's expressed interest in buying the Hilton in September but backed away to concentrate on acquiring Trump Marina. Fertitta said Landry's prefers to own a Marina District casino that has more room for growth.
"The physical plant is so much better," he said of Trump Marina. "We can do more things to make it a destination resort than we could at the Atlantic City Hilton."
As soon as the deal closes, Landry's plans to begin renovations. It will add new bars, lounges, live entertainment and retail shops. The hotel rooms and suites will be refurbished. Other upgrades include a new spa, poker room, simulcast room book and keno area. A new H2O Pool and Lounge will feature all-season hot tubs and fire pits.
The casino's new restaurants will include some of the brands currently in the Landry's portfolio. A Chart House restaurant, specializing in steaks and seafood, will overlook the marina. Other restaurants that will be added include Red Sushi, Lillie's Asian Cuisine and Noodle Bar, Grotto Italian Ristorante and Vic and Anthony's Steakhouse.
In addition to the Golden Nugget casinos, the company owns and operates more than 300 restaurant and retail locations, including the Rainforest Cafe and Bubba Gump Shrimp Co. chains. Fertitta said Landry's will continue to operate its Rainforest Cafe at Trump Plaza Hotel and Casino. He also said the company plans to open some of its restaurants throughout Atlantic City to help boost the city's economic recovery.
"We want to be part of the group that makes it a destination market," he said.
Landry's, however, will concentrate on Trump Marina's transformation. The casino includes a 728-room hotel tower and 79,000 square feet of gaming space. Trump Marina Associates manages the adjacent Sen. Frank S. Farley Marina for the New Jersey Division of Parks and Forestry. Landry's will inherit the 50-year marina management lease as part of the sale.
Longer term, Landry's plans to build a new hotel tower on Trump Marina's existing 17-acre property. Fertitta said Landry's has looked at an adjacent 14-acre parcel owned by MGM Resorts International but believes it has enough land to expand. The hotel project would begin once the casino is able to increase its room occupancy, now in the 70 percent range, to 85 percent to 90 percent, Fertitta said.
"In order to be competitive, we'll have to build new hotel rooms as soon as Atlantic City goes positive," he said.
Fertitta alluded to Atlantic City's four-year revenue slump, caused by the fragile economy and competition from casinos in surrounding states. Trump Marina's sale price of $38 million reflects the city's post-recession real estate crash. Resorts Casino Hotel, which was sold for $140 million in 2001, changed hands again in December for $31.5 million.
"You can't get anything cheaper than what casinos are selling for right now," said Robert McDevitt, president of Local 54 of UNITE-HERE, Atlantic City's largest casino union.
Trump Marina has been on the market for years, with a series of deals falling apart with different potential buyers. Most recently, New York-based gaming company Coastal Marina LLC reached a tentative deal to buy the casino in May 2008 for $316 million amid Atlantic City's prerecession boom in real estate prices.
Coastal wanted to rebrand the property into a Margaritaville-themed casino in partnership with singer-songwriter Jimmy Buffett. The price was later reduced to $270 million before the deal collapsed altogether in 2009.
Parent company Trump Entertainment also owns Trump Plaza and Trump Taj Mahal Casino Resort. Trump Marina's sale is part of the company's restructuring since emerging from Chapter 11 bankruptcy last year under the new ownership of corporate bondholders aligned with Donald Trump.
Although the Trump Marina sale means there will be one fewer Trump-branded casino lighting up the Atlantic City skyline, Donald Trump said he is happy with the deal.
"It's a wonderful transaction for the company and the buyer," Trump said.
Trump Marina is the weakest casino in the Trump group. Its gaming revenue fell 9 percent in 2010 to $147.4 million, dead last among Atlantic City's 11 casino hotels. Through the first three quarters of 2010, it suffered a $3.4 million gross operating loss. Results for the fourth quarter of 2010 will be released in April.
Trump Entertainment lacked the money to refurbish Trump Marina. Once known as Trump Castle, the property has undergone few major improvements over the years and is essentially the same casino that opened in 1985.
David Hughes, Trump Entertainment's chief financial officer, said the company will use proceeds from the sale to pay down the company's $344 million debt.
"We had three assets. We could either focus on three or on two. We felt it was better to focus on the Plaza and the Taj and to pay down our debt," Hughes said.
Currently, Trump Marina has nearly 1,600 employees. Landry's plans to hire more employees to staff all of the new attractions it will be adding, Fertitta said.
"It's good news for the Trump Marina employees, because they finally have some stability," said McDevitt, whose union represents 750 of the casino's workers.
The sale is pending regulatory approval by the New Jersey Casino Control Commission. As the casino's new owner, Landry's plans to continue to honor the Trump Marina customer points and loyalty programs.
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