ATLANTIC CITY — Wall Street giant Morgan Stanley suffered a $229 million loss in the third quarter stemming from its ownership of the Revel casino, and it now says its total $1.2 billion investment in the unfinished project is worth just $40 million.
The $229 million writedown, disclosed Wednesday in the investment bank's quarterly earnings, follows a $932 million loss in Revel taken by Morgan Stanley in the first quarter. Morgan Stanley slashed the value of its investment in the project from about $240 million to $40 million in the third quarter.
In early April, Morgan Stanley announced it would sell its ownership stake, depriving the troubled $2.5 billion casino of its chief financial backer. Since then, Morgan Stanley's development partner, Revel Entertainment Group, has been trying to put together an investment group to buy the project and secure more than $1 billion in new financing to complete construction.
Debtwire, a financial publication, reported this month that Revel has hired another Wall Street investment bank, J.P. Morgan, to raise $1.3 billion in construction financing. Officials from Revel and JP Morgan did not return calls from The Press of Atlantic City seeking comment on the report.
For months, Kevin DeSanctis, Revel's chief executive officer, has been tight-lipped about the search for financing. DeSanctis was expected to give an update on the project today during a panel discussion of casino CEOs at the Atlantic City Hospitality Trade Show, but has since withdrawn from the forum, organizers said.
Morgan Stanley's losses are the latest in a series of discouraging reports about Revel. Stone Concrete Inc., a Pleasantville contractor helping to build the casino, filed a breach of contract lawsuit this month claiming that Revel owes it more than $15.3 million. Revel has denied the charge.
Revel has completed the exterior of the casino complex and its 1,900-room hotel tower, but halted interior work last year to stretch out the cash it had on hand. New financing would allow Revel to resume construction of the interior, although DeSanctis has estimated it would take another 20 months to complete the work and open the casino. Revel originally planned to open in 2010, but the timetable has been pushed back to at least 2012.
Analysts believe Revel may be the last casino built in the slumping Atlantic City market for years to come. The Las Vegas-style megaresort is seen as the best hope for revitalizing Atlantic City as it continues to struggle in the sluggish economy and against fierce competition from the Pennsylvania casinos.
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