A New Jersey real estate investor has emerged as the would-be buyer for casino-zoned land that has languished on the market for three years despite its prime location in the center of the Boardwalk.
Mitchell Mekles, who has dabbled in the Atlantic City market before, is working to complete the deal with Pinnacle Entertainment Inc., the company that owns the land, said Anthony Graziano, a veteran property appraiser who has longtime knowledge of the Atlantic City market.
Graziano revealed Mekles as the buyer during an interview with The Press of Atlantic City. Graziano said his Toms River firm, Integra Realty Resources, has appraised the site for Pinnacle and a group of lenders. Pinnacle Entertainment, a Las Vegas-based casino operator, once had plans to develop a $1.5 billion megaresort on the property, but killed the project in 2010 and put the land up for sale.
After three years of trying to unload the property, Pinnacle announced in a U.S. Securities and Exchange Commission filing in March that it had finally reached a “definitive agreement” for a sale. Pinnacle divulged the sale price of $30.6 million but did not disclose the name of the buyer at that time.
The sale was supposed to close by the end of March, but Pinnacle noted in its securities filing that a final deal depended on financing. Pinnacle spokeswoman Kerry Andersen declined to comment on the sale beyond what the company said in its securities filing. Mekles did not return messages left at Mitchell Enterprises, his Fort Lee, Bergen County-based company.
Mekles and his partner, Brian Popper, have been exploring development options for the property but are not yet ready to release details, Graziano said.
“They saw this as a great opportunity and a super asset. They’ve got some plans for development and some enhancements,” Graziano said. “They are following up on their options and doing the right things.”
Keith Mills, Atlantic City’s planning director, said there were preliminary discussions in November about the buyers possibly transforming the site into a gigantic amusement park if the sale went through.
“We thought that would be great. It’s just what the city needs,” Mills said.
Pinnacle’s property falls within the city’s Tourism District controlled by the state Casino Reinvestment Development Authority. Kim Butler, a CRDA spokeswoman, said Mekles was part of an introductory meeting with the authority several months ago to discuss the land. A second meeting was held with the CRDA to discuss the land-use process.
However, Susan Ney Thompson, the CRDA’s deputy executive director, said no formal plans or presentations have been made for developing the site, nor has the authority been asked to give its assistance.
“We welcome the opportunity to speak with anyone interested in investing in Atlantic City,” Thompson said.
The Pinnacle site consists of nearly 20 acres of oceanfront property in the heart of the Boardwalk casino zone. Graziano said the site’s strategic location makes it a key piece of the city’s future.
“It’s a big asset that the city needs to incorporate in the redevelopment plans,” he said.
The Pinnacle deal is not Mekles’ first foray in the Atlantic City real estate market. He was the financial backer behind Redding’s Restaurant, a soul-food place on Kentucky Avenue that folded in February 2012 after 17 months in business.
Property records list a company called All Pro Properties LLC as the owner of the building where Redding’s once operated. All Pro Properties also is listed as the owner of a parking lot on Kentucky Avenue, according to the city Tax Assessor’s Office. All Pro Properties has the same Fort Lee mailing address as Mekles’ Mitchell Enterprises. A woman answering the phone at Mitchell Enterprises declined to say whether All Pro Properties was another Mekles-owned company.
Most of the Pinnacle site consists of where the old Sands Casino Hotel once stood — a supersized block bordered by Indiana Avenue, Pacific Avenue, Dr. Martin Luther King Jr. Boulevard and the Boardwalk. There are other smaller, outlying parcels, mainly along the beach block of Kentucky Avenue.
Pinnacle bought the Sands for $270 million in 2006 at the height of Atlantic City’s real estate boom. The Sands was imploded in 2007 to make room for development of Pinnacle’s ill-fated megacasino. The $30.6 million sale price allows Pinnacle to recover only a fraction of what it paid for the site.
On a much larger scale, Pinnacle’s property has come to symbolize the troubled Atlantic City market, which has been mired in a six-year casino slump caused by the sluggish economy and gambling competition in surrounding states.
“Land values have taken a hit in Atlantic City,” Graziano said.
Pinnacle filed a tax appeal challenging the assessed value of its property. The company settled the case with Atlantic City in December 2011 and was awarded a refund of $8.2 million. Previously, the land was assessed at $224 million, but the figure was reduced to $65 million.
Last year, the property was transformed into a public art display featuring sculpture work, a faux pirate ship and inspirational messages amid a parklike setting. The Atlantic City Alliance, a casino-funded marketing coalition that helped finance the art work, has emphasized that the display is only temporary. It will be removed when the land is ready for redevelopment.
Graziano said the land deal would also allow Mekles and Popper to grab control of a cluster of Boardwalk stores now owned by Pinnacle between Bally’s Atlantic City and Dr. Martin Luther King Jr. Boulevard.
“They are looking to do some long-term leases and get some high-quality tenants,” Graziano said. “They also want to do some facade improvements. They’re working to make the Boardwalk a little better in appearance.”
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