By Michael Aron
Chief Political Correspondent
The deal to sell Revel is on hold tonight.
The owners of the failed luxury casino hotel had a deal with Florida developer Glenn Straub that he would buy the building for $95.4 million by midnight last night.
But current tenants of the building, like a nightclub, fancy restaurants and the power plant next door, convinced the Third Circuit federal court of appeals that their businesses needed to be protected.
And yesterday the chief federal judge in Camden, Jerome Simantle, gave the parties until March 16 to sort that out.
Revel’s private equity firm owners, backed by a $70 million loan from Wells Fargo, say the sale is dead. Last night was the deadline to close, they say, and they’re losing money every day the building stays open.
The buyer’s lawyer is petitioning the court to delay the closing until the issues with the tenants are addressed.
“Over the weekend, I filed a motion to extend the deadline for closing until these issues were resolved. It really makes no sense at all to force someone to close on a property when they have no idea what they’re getting. And right now there is no way to tell exactly what we’re getting for our $95.4 million,” said Stuart Moskovitz.
A federal bankruptcy judge in Camden will hear the dispute tomorrow morning.
Gaming analyst Israel Posner said, “It’s a very, very complex set of stakeholders that are all involved in this very complex suit. And I think everybody knows, that it’s very hard to build a partnership, it’s hard to maintain a partnership and it’s complex to dissolve it. And then when you have Chapter 11 bankruptcy involved, it becomes incredibly complex to find fairness to all the parties.”
The power plant next door is threatening to turn off the heat, electricity and water.
The parent company, Revel AC, says it will keep Straub’s $10 million down payment.
This is the second time a Revel buyer has pulled out.
Toronto-based Brookfield Asset Management pulled out of its $110 million deal, and Revel got to keep Brookfield’s down payment of $11 million.
Revel cost $2.4 billion to construct.
Straub has talked about turning it into a water park or entertainment center, with a smaller casino component.
“About a third of that building was never really finished, so it could be office suites, law firms, virtually anything,” Posner said.
If the courts don’t extend the deadline for the sale to Straub, Revel’s owners will be looking for a plan C.