For Rent: Bader Field
» posted by Chuckmonster on 2008-10-14 20:30:27
Maybe, I'm not the only one who thinks this is a bit odd. From Newsday:
[Atlantic City officials] went ahead Tuesday with a plan to solicit bids from developers who could build as many as three casinos on the nearly 150-acre former Bader Field airport property.
Barely two weeks after the credit market has completely seized the machinations of the global economy, Atlantic City has decided to put one of the most coveted pieces of developable property in recent memory onto the bidding table. Seriously?
Apparently so... with a big, and extremely creative wrinkle : the property will not be sold, but instead leased long term. The upside of "ground lease" plan is two fold: it would provide the city with ongoing tax relief (and continued control of the property) and let developers use whatever money they can squeeze out of the credit market to begin designing and building process.
Paul Mas, Executive VP of Jones Lang LaSalle, the real estate firm charged with heading the RFP process explains:
Ground lease is a form of financing, the lessor does not have to come up with the cash to buy the property. It would allow the cash that does get raised to be put into the improvement.
Incidentally, the Owens Lang LaSalle firm has hooks in a number of properties in Macau, which uses the ground lease - albeit in a more limited fashion - as 'use rights' for all of the newer properties. One of the properties OLL are involved in - One Central Residences (adjacent to MGM Grand Macau) - is owned by ShunTak, a conglomeration of companies controlled by gaming magnate Stanley Ho & his daughter Pansy, whose relationship with MGM Mirage has been under investigation by New Jersey's Casino Control Commission for a near eternity.
Still, this leaves open the question of who is going to bite given these terms. Penn National Gaming, flush with $225M in alimony payments and an interest free $1.25B limit credit card, is the obvious choice, even if floated plans to build on top of Clayton's Self Storage on Rte 30 turns out to be more than a head fake.
Other suitors may include Wynn, recently excised Tropicana Casinos & Resorts and Dunes/Sands/Sahara sitewads Pinnacle Entertainment.
Does Wynn have the liquidity to file an RFP for a Bader tract? Probably. Would they? I doubt that Steve Wynn & Co will be able to swallow a 'ground use' agreement as there is no equity in the real estate holdings, just the buildings on top of it.
Tropicana Casinos & Resorts wants back in AC and have been attempting to prove that absentee thoughtlord Bill Yung has been firewalled from operations. Is plaintive wailing enough to satisfy NJCCC? Doubtful.
Given that Pinnacle can't get good enough financing to build on the property they already own, I can't see the city giving them a lease to do the same at Bader. The city looks at the ground lease concept as a way to not only bypass credit markets for purchase costs, but to help expedite the time to market.
Are there any other players flush with enough interest and cash to tug on "ground use" bait?