New York Hedge Fund Buys Ocean Resort Casino

A New York private investment firm has been identified as the new owner of the ailing Boardwalk hotel and casino resort

New York-based hedge fund Luxor Capital Group has been revealed as the mysterious buyer of Atlantic City’s Ocean Resort Casino after several weeks of speculations about its identity.

The private investment firm has no relation to the Las Vegas-based Luxor Hotel & Casino, which is owned by MGM Resorts International.

Luxor is buying Ocean from Colorado businessman Bruce Deifik just seven months after the opening of the Boardwalk property. Mr. Deifik acquired the hotel and casino resort early in 2018, paying $229 million to its previous owner, Florida investor Glenn Straub.

Mr. Deifik’s purchase of the Atlantic City casino resort was actually partially funded with a $122.5 million bridge loan from Luxor.

A press release from Monday revealed that Luxor would become the principal owner of Ocean, while Mr. Deifik will retain a small non-controlling interest in the property. First suggestions that the Colorado investor was looking for buyers for the hotel and casino resort emerged in a lawsuit filed last December by the former manager of the HQ2 club at the property, Joseph Morrissey.

Mr. Morrissey said in his lawsuit that he had his contract terminated due to the fact that he had a small stake in the Boardwalk property and Mr. Deifik wanted to eliminate any stakeholder who could hamper Ocean’s potential sale.

Renovation at the Property

The sale of the Boardwalk property was confirmed earlier this month when Mr. Deifik said that an undisclosed buyer would purchase the resort. While the identity of the buying entity was yet to be revealed at the time, the Colorado businessman said that the property’s new owner planned to invest $70 million to add a buffet, more rooms and suites, and for renovations at the casino floor.

There will also be a “substantial increase” in Ocean’s entertainment programming and player events in the coming months. The investment needs regulatory approvals and final documentation to close. That is expected to happen in the next few days.

Luxor also needs to obtain a gaming license in order to be able to operate in Atlantic City. While awaiting approval from New Jersey’s gambling regulators, the firm will hand the management of the property to a specially created temporary trust. A trustee will be appointed once the $70 million investment is finalized to oversee the trust until Luxor obtains interim authorization to enter the local gambling market.

Ocean said in a statement from Monday that it does not expect the transaction and the temporary existence of the trust to have effects on its daily operation.

The Boardwalk property originally opened doors in 2012 as Revel but was shuttered just two and a half years later, failing to become a profitable business. It reopened doors in June 2018 as Ocean Resort Casino and with Mr. Deifik and his team at the helm. The Colorado businessman spent $200 million into property renovations that aimed to mend the mistakes made by its previous owners.

Ocean was launched on the very same day that saw the opening of another Boardwalk property – Hard Rock’s reimagined former Trump Taj Mahal. While Hard Rock Hotel & Casino Atlantic City managed to quickly cement its position in the local casino market, Ocean’s gaming revenue has remained at or near the bottom of the pack among the city’s nine operational casinos.

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