New York-based hedge fund takes control of Ocean Resort Casino

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ATLANTIC CITY — After weeks of uncertainty, Luxor Capital Group, a New York-based private investment firm, has been identified as the majority stakeholder in Ocean Resort Casino.

Earlier this month, Bruce Deifik, a Colorado-based real estate developer and former principal owner of Ocean, announced the property would change hands, but that he would retain a minority stake in the casino hotel. At the time of the announcement, Deifik did not identify who the new controlling entity would be.

Deifik purchased the former Revel Casino Hotel in January 2018 for $229 million with a combination of financing from Luxor and J.P. Morgan Chase. The funding consisted of two bridge loans: $110 million from JPMorgan Chase Bank and $122.5 million from Luxor. The J.P. Morgan loan was repaid in June with a second loan from J.P. Morgan of $175 million.

“We are incredibly proud of the progress our team members have made in establishing Ocean Resort Casino as one of the premier gaming and leisure destinations in the United States,” said Frank Leone, CEO of Ocean Resort Casino. “We opened up the property even more effectively to the Boardwalk, and activated retail spaces and food and beverage options that have been extremely well-received by our guests.”

Deifik has not been seen on the property since mid-January, according to sources who were not authorized to speak to the media, but he will retain a minority share. AC Ocean Walk, a holding company of which Deifik was the chairman, is still the property’s casino license holder.

Luxor has committed $70 million in new strategic capital to Ocean Resort, which will be used to open a buffet, additional suites and rooms and investments on the casino floor. It also plans “a substantial increase” in its entertainment programming and player events in 2019.

The strategic investment is expected to close in early February, pending the receipt of the appropriate regulatory approvals and final documentation. The proposed investment will help fund the 2019 projects and provide the casino with more financial flexibility, according to a news release.

A public relations spokesperson for Luxor declined to comment Monday. The private investor firm was founded in 2002 by Christian Leone, who is not related to Ocean Resort CEO Frank Leone. According to a release from Luxor, the company has approximately $3.2 billion in assets under management and pursues an “event-driven” strategy to investment.

Luxor Capital Group has no current or past relations with the similarly named Las Vegas casino hotel.

Once the investment is approved, Luxor will undergo the licensing process by state gaming regulators.

Until Luxor receives interim licensing approvals, anticipated to be within approximately 90 to 120 days, a trust will be created for the purpose of holding the shares of the parent entity to AC Ocean Walk, the current license holder.

A trustee, who will be appointed upon closing of the $70 million investment, will oversee this trust until Luxor receives its interim authorization, at which point the trustee will be removed.

Ocean Resort expects no operational effects from the temporary existence of the trust.

Ocean Resort opened to the public June 27, along with Hard Rock Hotel & Casino Atlantic City. The two casinos contributed to a historic summer in the seaside resort and were heralded as key players in Atlantic City’s resurgence.

The $2.4 billion megaresort, which opened in 2012 and closed two years later before reopening in the summer of 2018, has struggled to gain a significant market share among Atlantic City’s nine properties.

Ocean Resort ended 2018 reporting $101 million in total gaming revenue, including nearly $8.4 million from its William Hill Sportsbook.

https://www.pressofatlanticcity.com/news/top_three/new-york-based-hedge-fund-takes-control-of-ocean-resort/article_7bfe8526-2f3d-555b-9561-03f14d746bc8.html

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