It’s mid-morning and a deep fog has descended on Atlantic
City, giving way to a drizzle and a slight breeze.
The ocean can barely be made out from a window directly
overlooking it from the newly branded Playground that juts out into the water,
but that doesn’t bother Bart Blatstein. He only sees the sun shining on this
forlorn gambling town.
“I’m able to look past the negativity,” he said,
referring not only to Atlantic City but other hardscrabble areas he has delved
into including Northern Liberties, North Broad Street and Delaware Avenue.
“Atlantic City looks like Rittenhouse Square compared to when I first started
in Northern Liberties.”
Blatstein’s Tower Investments Inc. is making a big
commitment in Atlantic City and that has some wondering what he sees in a town
that is struggling to regain its footing. What he sees is a bright future for
this Jersey Shore town.
The developer has so far picked up two sizable properties
in Atlantic City and is on the hunt for more.
Last November, he paid $2.5 million for the Pier Shops at
Caesars, which has been renamed the Playground and is being repositioned into
an entertainment complex.
“When I bought this, it was bleeding $3 million a year,”
Blatstein said as he walked through the property. “It was like a ship without a
rudder. It’s now $1.5 million in the black.”
More recently, Blatstein bought the Showboat Casino for
$22 million, which has 1.7 million square feet of space and a massive physical
footprint. Though he has an idea of what he wants to do with the property,
Blatstein is hesitant to divulge any details until they are firmed up.
If both properties were built today, the cost to replace
them would near $1 billion. Nothing like buying beach front property on the
cheap and that’s part of Blatstein’s motivation to make his move now.
His investments would mean nothing if he didn't have
confidence in Atlantic City's eventually turning itself around.
He said he believes Atlantic City is ready for a revival
and has all of the right characteristics to be even better than it was before.
It’s easy to get to and within a short drive of 30 million people. It’s on the
ocean and the boardwalk remains an attractive, popular feature. The
infrastructure is already in place and there’s also a confluence of state and
local leaders who are now focused on Atlantic City and want it to succeed.
The state has designated Atlantic City a Garden State
Growth Zone, which makes it eligible for a range of tax credits and other
incentives to help stimulate economic development activity and job growth.
Projects can receive $40 million or more and can run the gambit from retail,
tourism and hospitality to industrial, office and residential.
With all of that in mind, Blatstein has zeroed in on
properties to buy including the Garden Pier and Kennedy Plaza. He is making the
run at some others behind the scenes.
“I’m very selective,” he said.
The criteria? Properties have to have the right price,
location, size and scale. That's all.
Blatstein made his first buy in Atlantic City around the
same time officials decided not to grant a casino license for his mixed-use
development called the Provence at 400 N. Broad St. in Philadelphia.
Trying to capture something that became elusive hasn’t
been his motivation in Atlantic City, but the experience prepared him for his
venture into the South Jersey community. For a couple of years leading up to
the Pennsylvania Gaming Control Board’s decision on the last license in
Philadelphia, Blatstein immersed himself into learning every aspect of the
gaming industry including visiting Las Vegas and reading a biography on Steve
Wynn.
Blatstein incorporated those lessons learned into the
design of the Provence. Key to that project's success was making the casino
just one component and not the main driver of development. It was also
important for the property to have other entertainment venues, restaurants and
retail to attract a variety of visitors to it. And he is applying those ideas
to his transformation of the Playground.
He has also concluded that Atlantic City has suffered
from a lack of re-investment on the part of casino and other large property
owners.
“Las Vegas reinvents itself every ten years,” he said.
“It’s constant reinvestment and reinvention.”
Blatstein’s interest in Atlantic City has caught the
interest of other developers who see his investment as a signal to get in now.
Phil Balderston of Odin Properties, a Philadelphia real
estate company, is one of those who decided to dip into the market. A former
Blatstein protege who worked as director of finance and acquisitions at Tower
Investments, Balderston has confidence that any investment will turn out to be
a wise one.
“We see a long-term value in Atlantic City,” he said.
“The town only has one way to go and that’s up.”
Odin recently made its first buy in the city and acquired
Atlantic Gardens, a 178-unit apartment property for $5.25 million. The complex
is 60 percent vacant and Balderston intends to invest millions gutting the
entire property and rebranding it as Carolina Village. Odin has another
apartment property under agreement for $2 million that is expected to close by
year's end and continues to search for other multifamily properties to buy.
And, that’s actually turns out to be one Blatstein’s
other goals here.
“I want people to know it’s okay to jump in the water,”
he said. “I’d like to think I have the ability to see the potential and, if it
give others confidence to invest, then I benefit from that, too.”
Source: Philadelphia
Business Journal
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