The announcement this month that Stockton University is negotiating to buy the former Atlantic Club casino hotel in Atlantic City elicited a feeling of déjà vu, and not the good kind.
Less than four years ago, the college under then-President Herman Saatkamp acquired the former Showboat Casino Hotel for $18 million. The plan was to make it the start of a new Atlantic City campus.
The property turned out to have a deed restriction requiring that it only be used for a casino hotel. An agreement to sell the property to Glenn Straub, the buyer of the closed Revel casino hotel, soon followed. When that didn’t pan out, the Showboat was sold to redeveloper Bart Blatstein for $23 million — covering Stockton’s purchase price but not all of the $8 million it spent maintaining the property.
The Showboat fiasco prompted state Senate hearings and a new law requiring public colleges to get approval from their trustees and attorneys on property purchases of $10 million or more (which Stockton had done on the Showboat deal, just not with sufficient due diligence). Reports on such purchases must also be submitted to the governor, Legislature and secretary of higher education.
Now that the Stockton city campus is getting ready to open in a much better location, the failure of the Showboat deal looks like a bit of good luck. But the Showboat affair and Stockton’s recent sale of Seaview Resort in Galloway Township make people wonder about the school’s real estate acumen.
Stockton bought Seaview in 2010, giving it nearby student housing and a chance for hands-on hospitality education. People who only saw that it had paid $20 million for the property, invested $22 million in it, and then sold it for $21 million figured it was another bad deal.
But over the years the students at Seaview and the commercial leases at the golf resort had generated $28 million for Stockton. Now that the university is enlarging its main campus and adding another in Atlantic City, Seaview is no longer needed for students.
Which brings us to the current deal in the works. The former Atlantic Club is just two blocks from the city campus and many have speculated that it would be a good addition. Enrollment at the city campus, which will open this fall, already is almost at 100 percent — 1,200 students and more than 500 of them campus residents.
The deal that President Harvey Kesselman is negotiating won’t be easy. Florida-based TJM bought the vacant Atlantic Club for $13.5 million in 2014. Stockton is seeking to require that TJM demolish the hotel tower, leaving the valuable nine-level parking garage on the 11 lots included in the property.
The trustees on Aug. 8 approved the plan to purchase the property. Trustee Leo Schoffer said the purchase would lay the groundwork for Stockton’s future in the city — assuming much more additional study favors the deal and it can be concluded.
Stockton’s property dealings can seem breathtaking at times, but they make sense in the context of a university with strong growth and playing a key role in the revitalization of the region’s major city.
Residents looking for the kind of successful deal they can relate to should consider Stockton’s sale this year of the Linwood home of a former president. It got $390,000 for that, after paying the state $150,000 for it last year.
Stockton University isn’t and shouldn’t be looking to execute property deals for a profit. That’s not its mission.
But adding the former Atlantic Club to its city campus under reasonable terms, if possible, looks like it would yield major benefits to students, the city and the region. That would be a far bigger payoff.