The Atlantic City Hilton Casino Resort has not been able to weather the economic downfall and has failed to make necessary payments. Thus, it might be forced into receivership and sold by the trustee of its mortgage holder. This is according to papers filed in the U.S. District at Camden, New Jersey on Wednesday.
The casino hotel has not made payments on its mortgage for more than a year now. This is why the U.S. Bank, trustee of J.P. Morgan Chase Commercial Mortgage Securities Corporation (Hilton’s mortgage holder), is seeking to hand it over to a third-party while searching for a buyer. This third-party company will be tasked to take care of controlling the hotel and collecting money from operations.
The casino hotel is currently owned by an affiliate of the Colony Capital LLC. The private real estate investment firm amassed the Atlantic City Hilton, along with the hotels in Tunica, Mississippi, and East Chicago, as part of a $1.24 billion deal. The deal was set in 2005.
The Atlantic City Hilton Casino Resort just had a $20 million remodeling project. The project saw that the hotel will have new restaurants and a player’s club in the former Peregrine’s restaurant. Despite these changes, though, the casino hotel saw a drop in gaming revenues.
Why is Atlantic City Hilton unable to manage its finances? Aside from getting in the middle of a tight competition from nearby hotels, the casino hotel was also unable to keep afloat in the crashing economy. The Atlantic City Hilton was hit with a 19.2% decline in revenues, the highest drop reported in the city’s 11 casino hotels.
The hearing for the sought receivership is set on the 25th of August. It shall determine if the Hilton will be turned over to another company and posted for sale. In the meantime, the Hilton will operate as usual.