Bart Blatstein is taking his first leap into Atlantic
City and is buying the Pier Shops at Caesars.
The developer, known for going into areas that others
veer away from or don’t even consider, is acquiring the 290,210-square-foot
retail center at 1 Atlantic Ocean Ave. for a steep discount. Blatstein is
reportedly paying $2.5 million for the property, according to sources.
Blatstein and his Tower Investments have focused on
buying and developing retail, residential and mixed-use properties in
Philadelphia. The acquisition of the Pier Shops is expected to be the first of
many in the struggling Shore town for Blatstein.
“I’m thrilled to be a part of the renaissance of Atlantic
City,” he said. “This is what Tower Investments does. We go into areas that
others run away from and revitalize them.”
Blatstein declined to confirm how much he is paying for
the property but indicated the transaction should close this year.
Paul Steelman, a renowned architect that has worked on
dozens of casino, hospitality and entertainment projects worldwide, is a
partner in the deal. Steelman is also Blatstein’s architect for his Provence
project in Philadelphia that is seeking to win a casino license.
Blatstein said gambling or a casino will not be part of
the Pier Shops and his plans for repositioning the property.
“What we’re going to do is going to be incredible,” he
said. “It’s going to take the whole Atlantic City experience to another level.
I think it’s going to rock.”
Blatstein declined to divulge details on what he intended
to do with the property other than to say it would be a retail and
entertainment destination.
The Pier Shops is attached via skybridge to Caesars
Atlantic City and has direct access off the boardwalk. The retail space is now
just 52 percent occupied.
The Pier Shops, which has high-end retailers such as
Gucci and Louis Vuitton, has been on the decline almost since it was developed.
It was constructed in 2004 and then redeveloped in 2006 by Inc. on a 900-foot
long pier. It was built under the theory that high-end casinos have a captive
audience of shoppers who will use the same gambling impulse to splurge on a
Gucci bag. At the time, it was appraised at $187.5 million.
By 2010, Taubman gave the property back to lenders and
the center was put in the hands of a special servicer overseeing a $135 million
mortgage on the property. In August 2012, the investors who ended up buying the
commercial mortgaged back securities loan on the property decided to put it up
for auction. It garnered a $25.1 million bid, but the special servicer decided
not to take it.
At one point, it appraised for $11 million only to have
it later cut by about half that amount.
The special servicer, Torchlight Loan Services, put the property
up for sale this past June, hoping to get enough to help pay down some of the
debt. In all, about $150 million of debt is weighing down the property. It has
about $50 million in equity, according to sources.
By trading for what is believed to be about $2.5 million,
none of the debt will get paid off but the property will be in the hands of a
developer with a solid track record. Blatstein said he has an affinity for
Atlantic City and the Shore, having gone there as a child and currently owning
a house there.
“I have a fondness for the Shore and I love Atlantic
City,” he said. “People have overreacted to what’s been going on in Atlantic
City.”
To that end, Blatstein intends to look for other
investment opportunities at the beleaguered Shore town with the Pier Shops as
his starting point.
Source: Philadelphia
Business Journal
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