The Economy in AC

http://money.aol.com/news/articles/_a/bbdp/more-bad-news-likely-in-store-for-ac/241985
For the first nine months of the year, Atlantic City casinos won $3.6 billion, down 6.3 percent from the same period in 2007.

Poor casino's only won 3.6 billion so far this year. Down 6.3, what they don't say is that since Borgata opened they went up at least 6.3 in revenue. I'll contribute the slow down to a mix of things. One, they are now building slot parlors and casinos in all neighboring states including Pennsylvania, Delaware, Maryland, and New York where most of the day visitors come from. Of course to plan for this the city did nothing but put together a smoking ban that launched this past month. This smoking ban single handedly decreased revenues by such a tremendous amount that all the employees that were for it ran into a city counsel meeting and had it changed so they could keep their jobs. Of course the overall economy effects the ability for new developers to borrow to finish a project like Pinnacle. Ironically enough the straw that broke Pinnacle's back was not revenue or money, but a Porn shop on the corner of Pacific ave is holding out and asking about 8 million? or so for it to leave. Pinnacle's land acquisition team should have picked this up in phase one, not after acquiring and tearing down a casino and launching a multi million dollar ad campaign. Like everything else, everyone is very gloom and doom, that it is horrible and will never be better again. People are afraid, and when they have fear they don't spend... but they still spent 6.3 billion so far this year.
In the end Atlantic City will still be the only casino's on the beach in Atlantic City. They need to play up their nostalgia and keep the older buildings and stop tearing them down. If people want Vegas they will simply go to Vegas. There has been 400 layoffs at Borgata and I think about 200 of them are dealers? My brother just missed the cut and kept his job. They have moved some people to different shifts and have mostly kept people based on seniority as the union would demand. None the less, they seem to now be leaning on the people they kept to fill the time. This simply means they can't get days off like they use to before. What this tells me is that they could have afforded to keep a few employees, but used this opportunity to slim down once in case it gets more slim in the near future. The management of this monster company is very wise, hence their massive success and still remaining success.
There is no doubt business is down and it is down for everyone. It is also November and people are scared to death of the outcome from this election. World safety and homeland security are now back on the table and everyone has interest in making sure this newly elected president is going to know what to do, now that the tele-promters are off and he can no longer compare his opponents to George Bush for a favorable result.
Overall Real Estate in AC has leveled off but remains stable in it's decline. Riskier neighborhoods and investment property areas are sitting stagnant while people still buy up the good neighborhoods when the prices are right. Everyone is making a lot less, they then again, we just spent four years making a lot more then we should have. Those who have lived outside of their means are paying the price as we speak, those who were humble are still being thankful for this recent past boom. Those with adjustable rates are pointing the finger and being victims, those with fixed low rates are grunting it out as the strong people do here in South Jersey, while awaiting a real estate turn around to secure their future.
To all the self proclaimed wise men who pushed me into 401k's, Stocks, Bonds, Mutual's, Retirement accounts, etc... I never bought any of it. The bottom dropped out! But now I'm seriously considering buying in because buying at the bottom is always a good idea. Good night and God bless America!

Fall Market

So there is an excess of coverage on the poor economy and this economic bailout bill.... There is a massive election coming up in which a candidate who wins will select some supreme court justices who stay much longer then the president. Amongst all this hoopla of stocks and elections there is still houses sitting on land. My point here is that real estate is tangible. It does not cease to exist if the news about it is really bad. It doesn't matter who is in office, you can still rent a property. When the government makes bad decisions your retirement savings in a home do not get cut in half like my wife's retirement account last week. Real Estate remains the best place for most people to store their money long term. By making higher payements on your monthly loan you can shorten your loan period. By using your home as a retirement account you can save incredible amounts of money by not paying the interest you would have paid on the lent money. By investing in something you control completely you can have piece of mind that corrupt politicians will not be putting thier interests before your investment.
One thing that has changed for the better is the buyers market this fall and winter. It is a great time for buyers to add to their real estate portfolio. A rental property will give you extensive amounts of tax breaks and be an incredible place to use as a savings account while tenants foot the bill.

Margate Condo's

Summer is in full swing and I've just began selling condo's near the beach in Margate. At 16 South Washington Avenue in Margate is a four unit building that had a recent condo conversion. The value is tremendous for using it yourself or even as an investor for the market that is "coming back." Offstreet parking, decks, totally renovated, location is sweet. The center piece is a rear house that is all new with granite kitchen and new stainless appliances (what else right?) complete for only 449 on the South Side in Margate. Call in with interest. 609.377.4565

USDA Loans

There were a bazillion loan programs available just a couple years ago. Now they are disappearing... the programs, and in some cases the entire bank. For sure the greedy loan agents are now out of the market because it's much harder to find a sucker. I've recently been introduced to an amazing USDA loan program that makes Fannie Mae for the birds. It even tops the FHA loans even with the new guidelines. As bank programs are getting tighter and harder to write, the government backed programs are loosening. This is surely the way to go. USDA requires no money down, full documentation, but no assets needed. A credit score and a USDA approved township puts you on your way to one of the greatest programs I've seen in any market. Writting them in EHT and Galloway NJ all the time right now. Works for refinance or primary home purchase. Investor loans... well see you guys in a few years. For now investors must have big money down just like Fannie Mae. Call me for loan specifics.

Jose Canseco is Ducking Me!

Just for the record I've put in an official request to fight Mr. Canseco at Bernie Robbins Statium on July 12th. It is this bloggers opinion that Mr. Canseco is absolutely dodging me and does not want to catch an old school whopping from this Atlantic City native. No steroids on this end, Mr Canseco I will smash you! Look no further.

Jose Canseco looking for someone to fight in Atlantic City

Baseball star Jose Canseco recently revealed that the mortgage on his home had been foreclosed, and he blamed two costly divorces for his financial woes. Because the dude has to pay the bills, he has turned to celebrity boxing.
Canseco and promoter Damon Feldman are seeking a challenger to fight the Oakland Athletics veteran on July 12 at the Bernie Robbins Stadium in Atlantic City. The chosen opponent will be paid $5,000. Brave souls should e-mail fightcanseco@aol.com. Canseco's opponent will be revealed in this column next week.
No word on whether Canseco, who admitted to having used steroids throughout his baseball career, will be juiced for the fight. Tickets will be available through Center Stage, 800-677-8499.

Credit Crunch comes to an end, Pinnacle ahead!

The credit crunch is a good thing when it comes to purifying the market.... all the little guys have put the tails between the legs and jumped out... Big boys are pushing big plans, they all know that the down time is the time to plan and get things moving. AC is in the forefront as usual in National Real Estate news. Check out a Wall Street take on it...

Wall Street: Credit crunch will weed out poor casino plans
By WAYNE PARRY Associated Press Writer
May 20, 2008

ATLANTIC CITY, N.J. - The credit crunch that is delaying some casino plans is nearing an end, even though it still may kill some poorly conceived projects, a panel of Wall Street experts said Tuesday. Speaking at the East Coast Gaming Congress, officials with Wall Street firms said credit is still available, although at a higher price. Joel Simkins, senior vice president of Macquarie Securities, was asked to compare the duration of the credit crisis to a baseball game. "I'd say we're in the bottom of the sixth," he said. "i think we're nearing the end of the credit crisis. You have investors starting to come back and look at the sector, and you have vulture investors coming in to look at distressed properties.
"Deals are still getting done, and credit markets are opening back up," he said. In Atlantic City, proposed projects by Pinnacle Entertainment and Revel Entertainment have been affected by credit markets; Pinnacle has said it may abandon its Atlantic City plans if credit markets don't improve within a year or two. Lawrence Klatzkin, managing director of Jefferies & Company, said he thinks both Pinnacle and Revel will ultimately build their Atlantic City projects. John Maxwell, managing director of Merrill Lynch, said credit markets are open now, although at a more expensive price for borrowers. He said the tighter credit has made gambling companies look more closely at their plans. "Maybe a new project in Atlantic City is not at the forefront of that," he said. He also said it will be interesting to see what the Tropicana Casino and Resort sells for in Atlantic City. The property's former owners were stripped of their casino license in December after less than a year of poor performance, and the Tropicana is up for sale. Maxwell and Simkins both predicted it will sell for less than $1 billion. Klatzkin predicted the price will top the $1 billion mark. One potential suitor who has dropped out of the Tropicana sweepstakes is the Mohegan Indian tribe in Connecticut. Mohegan Sun CEO Mitchell Etess said the tribe had been considering a bid several months ago, but decided against it. "The deal just didn't make sense for us," he said. Etess said the Mohegans are still interested in expanding to Atlantic City, and are looking at existing casino-hotel properties. But he said no deal was imminent. Within the next five years, all three panelists predicted even more competition in the East Coast gambling market, including the possibility of casinos or slots parlors in Massachusetts, Maryland and Ohio.

Transformation of Atlantic City

This sums up what is proposed and in motion here in Atlantic City as far as Casino Real Estate goes. It is this bloggers opinion that the AC economy will go into steriod mode as these places begin to open, making now the time to buy in the county and more specifically on the island before it gets outrageous.

Look out, here comes Atlantic City’s transformation
Billions of dollars, big plans set to make over the aging town
By Liz Benston
Mon, Jan 28, 2008 (2 a.m.)

Courtesy MGM Mirage
MGM Mirage is planning a $5 billion resort with at least 3,000 hotel rooms called CityCenter East.

In 1989, Steve Wynn’s Mirage ushered in a megaresort era marked by a wave of themed and whimsical luxury hotels.
Now, Atlantic City — reeling from competition for penny-pinching slot players — is on the cusp of a sort of salvation, as experts predict a Las Vegas-style transformation of the aging seaside town.
At least three casino operators — each with connections to Wynn and his epic-making Mirage — are pursuing luxury resorts in Atlantic City even as the East Coast gambling mecca is reporting its first annual decline in gaming revenue since the first casino opened there in 1978.
Their confidence, not surprisingly, springs from Las Vegas, which hasn’t always had growth years either.
Strip revenue, when measured year-over year, has fallen three times over the past two decades — in 1996, 2001 and 2002. The largest drop was but 2 percent in 2001, as a result of the 9/11 terrorist attacks. In 1996, the Asian banking crisis slammed global stock markets and hurt high-roller play on the Strip, resulting in a 1.4 percent decline.
The closest comparison to the trend in Atlantic City is the spread of tribal casinos in California, the Strip’s largest feeder market. And though some consumers may be taking fewer Las Vegas trips as a result, Vegas can’t directly attribute any slowed growth to California casinos. In fact, there’s some evidence that easier access to gambling spurs interest in Las Vegas, which hosts the biggest poker tournaments and offers more eye candy.
With only 11 casinos — and only one of them built in the past 15 years to the luxury standards of the Strip — Atlantic City is far from Las Vegas by any definition.
When Boyd Gaming opened the Borgata resort with MGM Mirage in 2003, the resort soon became the biggest and most profitable revenue generator in Atlantic City, with some of that growth coming at the expense of other casinos in town. The Borgata also is attracting new, more discriminating customers who wouldn’t otherwise travel to Atlantic City.
Though some wonder whether Atlantic City’s proximity to multiple gambling markets will make it hard for the city to rise much beyond its roots as a gambling fix for day trippers, others say the city is primed for Las Vegas-style growth.
Here’s what’s in store for Atlantic City:
• MGM Mirage is planning a $5 billion resort with at least 3,000 hotel rooms called CityCenter East.
• Revel Entertainment, with investment bank Morgan Stanley, is proposing an oceanfront resort with two hotel towers of 1,900 rooms each.
• Pinnacle Gaming, which bought and imploded the old Sands casino in Atlantic City, envisions a major resort there.
All the players have ties to Wynn and his former company, Mirage Resorts.
Pinnacle Chief Executive Dan Lee was Wynn’s chief financial officer at Mirage Resorts, sold to MGM Grand in 2000. Pinnacle’s Kim Townsend, who is leading the Atlantic City development, is another Mirage Resorts grad and was involved in the openings of Mirage and Treasure Island. Revel Entertainment is a new gaming company formed by Kevin DeSanctis, a former Trump Plaza executive who began his career in Las Vegas and was president of casino operations at the Mirage. MGM Mirage inherited the vacant CityCenter land (as well as the land now occupied by the Borgata resort) from Wynn, who sold it in his exit from Mirage Resorts.
There’s already evidence that the Borgata’s nongaming attractions are motivating customers to stay longer than one night — which might otherwise be enough for a quick gambling fix.
On the Strip, where nongaming spending is nearly 50 percent of the total, fancy dinners, expensive baubles and elaborate entertainment are helping offset only moderate growth in gambling revenue. In Atlantic City, nearly 80 percent of revenue comes from gambling, though that number is as low as 65 percent at the Borgata.
The best indicator of Atlantic City’s development as a resort destination, experts say, comes down to a hard-and-fast number.
New Jersey’s gaming tax, which comes to about 9 percent with state and local assessments, is the second-lowest in the nation next to Nevada’s rate of 6.75 percent. And if the Nevada teachers union gets its way, a statewide petition could raise Nevada’s towline gaming tax to 9.75 percent — putting New Jersey in the financial lead, so to speak.
With the Strip becoming saturated and riverboat markets across the country becoming a more competitive place to make a buck, Atlantic City — which sits next to one of the largest and most dense affluent populations in the country, with New York on one side and Philadelphia on another — has become more appealing for long-term investors, analysts say.
The Borgata experiment, coupled with New Jersey’s low tax rate, is paving the way Atlantic City’s first wave of multibillion-dollar resorts.
“The future of Atlantic City is its evolution into a Las Vegas-style multi-entertainment destination resort,” said Harvey Perkins, an analyst with Spectrum Gaming Group, a global gaming consultant based in Atlantic City. “Just as the tens of thousands of slot machines (in California) have had no material impact to Las Vegas, if Atlantic City is properly capitalized due to its low tax rate, the same should prove to be true here.”
Spectrum recently projected that Atlantic City’s gaming revenue will rise to $5 billion, a 2 percent increase from 2007 yet less than the record-setting $5.2 billion generated there in 2006. (Gaming revenue fell 5.3 percent at the city’s 11 casinos for the first 11 months of 2007.)
A more upscale future presents a double-edged sword for Atlantic City’s long-standing properties.
As in Las Vegas, some of Atlantic City’s older casinos will lose some business as customers trade up to more expensive resorts. And yet, several older properties on the Las Vegas Strip have benefited from the new competition, reporting some of their most prosperous periods in recent years as customers who couldn’t afford to stay at the priciest properties stayed elsewhere.
“There were many skeptics when Borgata was built who said customers wouldn’t spend more or necessarily appreciate higher-end surroundings,” MGM Mirage President and Chief Operating Officer Jim Murren said. “All properties with the exception of Borgata compete mostly on the deal.”
But Atlantic City is a competitive market like Las Vegas in that it doesn’t issue a specific number of licenses and “rewards investment” while penalizing the opposite, Murren said.
CityCenter East, he said, “is another leap of faith — that we can transform the market with a significantly larger investment.”
Atlantic City will add more than 2,000 hotel rooms next year, including 800 premium rooms at the Borgata’s upcoming Water Club addition, offsetting some of that new competition from Pennsylvania.
The city will eventually offer a critical mass of attractions to lure customers from Pennsylvania’s more conveniently located casinos, Perkins said.