American Casino & Entertainment Properties
Encyclopedia
American Casino & Entertainment Properties (ACEP) is a casino holding company headquartered at the Stratosphere Las Vegas
. ACEP was a wholly owned subsidiary of American Real Estate Partners
before it was sold to Whitehall Street Real Estate Funds in February 2008.
Las Vegas on April 30, 1996, the Stratosphere Corporation was forced to file for bankruptcy. After acquiring a majority of the bonds, ACEP gained control of the casino.
On November 29, 2005 Harrah's Entertainment
announced plans to sell the Flamingo Laughlin
casino to ACEP. The $170 million sale closed on May 19, 2006 and included the sale of the 7.7 acres (31,160.8 m²) Traymore Hotel
site in Atlantic City, New Jersey
to AREP Boardwalk Properties. Plans called for the property to be renamed the Aquarius within 6 months of the sale. The Flamingo Laughlin became the Aquarius
in October 2006. In November 2006, The Traymore Hotel site was sold independently by AREP to Pinnacle Entertainment.
On April 23, 2007 it was announced that ACEP was being sold to Whitehall Street Real Estate Funds, an investment fund managed by Goldman Sachs
for $1.3 billion. Carl Icahn
acquired the four properties for $300 million. Final sale was completed on 21 February 2008. Although revenue for 2008 has only slipped by 4.47% from 2007, the interest costs of acquisition has turned ACEP a money losing operation.
On 21 February 2008 the ownership of ACEP changed hands from the previous owner Carl Icahn
, to Whitehall Street Real Estate Funds. As of 11 February 2008 Carl Icahn's personal fortune was calculated at $14.0 billion by Forbes, making him the 46th richest person in the world. The new owners retired the $255m senior notes held by the former owner, and replaced them with $1.1 billion in new notes held by Goldman Sachs Term Loans, that are due to be refinanced on March 11, 2010. The interest on these loans far exceeded the net income of the company in 2007. The income of the company had to grow to cover this new financing.
Revenue peaked for the first quarter of 2008 when the company was purchased and by the 4th quarter began plummeting precipitously. The cost of the acquisition was so considerable that the company began operating at a net loss. On March 4, 2009 the company announced that it would begin layoffs.
According to an article on May 13, 2009 in the Wall Street Journal, Whitehall Street Real Estate Funds has been in discussions to restructure the debt with its lender, Goldman Sachs, due to concerns that the company may default if gaming and visitor numbers continue to decline. Whitehall, which is an affiliate of Goldman, is finalizing terms of an agreement that would see Goldman forgive $593 million of the $1.1 billion debt load. Whitehall would also be released from an additional $200 million in additional debt. In exchange for the debt relief, a mortgage unit of Goldman would gain a 22 percent interest in the company.
In 2009 net revenue fell to $356 million, its worst revenue since 2005. It restructured its debt in the last quarter and laid off 600 employees.
Stratosphere Las Vegas
Stratosphere Las Vegas is a tower, hotel, and casino located on the Las Vegas Strip in Las Vegas, Nevada, United States. Its tower is also the tallest observation tower, and the 5th-tallest structure, in the United States, as well as being the tallest structure in Las Vegas.It is owned by Whitehall...
. ACEP was a wholly owned subsidiary of American Real Estate Partners
American Real Estate Partners
Icahn Enterprises is a diversified holding company based in the General Motors Building in New York City, New York.-History:...
before it was sold to Whitehall Street Real Estate Funds in February 2008.
History
Shortly after opening the StratosphereStratosphere
The stratosphere is the second major layer of Earth's atmosphere, just above the troposphere, and below the mesosphere. It is stratified in temperature, with warmer layers higher up and cooler layers farther down. This is in contrast to the troposphere near the Earth's surface, which is cooler...
Las Vegas on April 30, 1996, the Stratosphere Corporation was forced to file for bankruptcy. After acquiring a majority of the bonds, ACEP gained control of the casino.
On November 29, 2005 Harrah's Entertainment
Harrah's Entertainment
Caesars Entertainment Corporation is a private gaming corporation that owns and operates over 50 casinos, hotels, and seven golf courses under several brands. The company, based in Paradise, Nevada, is the largest gaming company in the world, with yearly revenues $8.9 billion...
announced plans to sell the Flamingo Laughlin
Flamingo Laughlin
Aquarius Casino Resort is the largest hotel and casino located in Laughlin, Nevada, United States. Owned by American Casino & Entertainment Properties, it has 1,907 rooms and suites in two, 18-story towers that overlook the Colorado River...
casino to ACEP. The $170 million sale closed on May 19, 2006 and included the sale of the 7.7 acres (31,160.8 m²) Traymore Hotel
Traymore Hotel
The Traymore Hotel was a resort in Atlantic City, New Jersey. Begun as a small boarding house in 1879, the hotel expanded and became one of the city's premier resorts. As Atlantic City began to decline in its popularity as a resort town, during the 1950s and 1960s, the Traymore diminished in...
site in Atlantic City, New Jersey
Atlantic City, New Jersey
Atlantic City is a city in Atlantic County, New Jersey, United States, and a nationally renowned resort city for gambling, shopping and fine dining. The city also served as the inspiration for the American version of the board game Monopoly. Atlantic City is located on Absecon Island on the coast...
to AREP Boardwalk Properties. Plans called for the property to be renamed the Aquarius within 6 months of the sale. The Flamingo Laughlin became the Aquarius
Aquarius Casino Resort
Aquarius Casino Resort is the largest hotel and casino located in Laughlin, Nevada, United States. Owned by American Casino & Entertainment Properties, it has 1,907 rooms and suites in two, 18-story towers that overlook the Colorado River...
in October 2006. In November 2006, The Traymore Hotel site was sold independently by AREP to Pinnacle Entertainment.
On April 23, 2007 it was announced that ACEP was being sold to Whitehall Street Real Estate Funds, an investment fund managed by Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
for $1.3 billion. Carl Icahn
Carl Icahn
Carl Celian Icahn is an American business magnate and investor.-Biography:Icahn was raised in Far Rockaway, Queens, New York City, where he attended Far Rockaway High School. His father was a cantor, his mother was a schoolteacher...
acquired the four properties for $300 million. Final sale was completed on 21 February 2008. Although revenue for 2008 has only slipped by 4.47% from 2007, the interest costs of acquisition has turned ACEP a money losing operation.
ACEP and the Recession
In 2007 Whitehall Street Real Estate Funds who owned 40% of the Las Vegas Hilton, and was a passive investor in other casino properties made an offer of $1.3 billion for the four properties. The appraisal assigned a value of $718.443 million to the land under the four properties. The buildings were worth $365.59 million. The impressive land valuation seemed to be almost entirely based on the undeveloped 17 acres (68,796.6 m²) of land near the Stratosphere.On 21 February 2008 the ownership of ACEP changed hands from the previous owner Carl Icahn
Carl Icahn
Carl Celian Icahn is an American business magnate and investor.-Biography:Icahn was raised in Far Rockaway, Queens, New York City, where he attended Far Rockaway High School. His father was a cantor, his mother was a schoolteacher...
, to Whitehall Street Real Estate Funds. As of 11 February 2008 Carl Icahn's personal fortune was calculated at $14.0 billion by Forbes, making him the 46th richest person in the world. The new owners retired the $255m senior notes held by the former owner, and replaced them with $1.1 billion in new notes held by Goldman Sachs Term Loans, that are due to be refinanced on March 11, 2010. The interest on these loans far exceeded the net income of the company in 2007. The income of the company had to grow to cover this new financing.
Revenue peaked for the first quarter of 2008 when the company was purchased and by the 4th quarter began plummeting precipitously. The cost of the acquisition was so considerable that the company began operating at a net loss. On March 4, 2009 the company announced that it would begin layoffs.
According to an article on May 13, 2009 in the Wall Street Journal, Whitehall Street Real Estate Funds has been in discussions to restructure the debt with its lender, Goldman Sachs, due to concerns that the company may default if gaming and visitor numbers continue to decline. Whitehall, which is an affiliate of Goldman, is finalizing terms of an agreement that would see Goldman forgive $593 million of the $1.1 billion debt load. Whitehall would also be released from an additional $200 million in additional debt. In exchange for the debt relief, a mortgage unit of Goldman would gain a 22 percent interest in the company.
In 2009 net revenue fell to $356 million, its worst revenue since 2005. It restructured its debt in the last quarter and laid off 600 employees.
Casinos
- AquariusAquarius Casino ResortAquarius Casino Resort is the largest hotel and casino located in Laughlin, Nevada, United States. Owned by American Casino & Entertainment Properties, it has 1,907 rooms and suites in two, 18-story towers that overlook the Colorado River...
- Arizona Charlie's DecaturArizona Charlie's DecaturArizona Charlie's Decatur is a 258 room casino hotel with a locals casino in the Charleston Heights area of Las Vegas, Nevada.-History:Arizona Charlie's Decatur are the results of original efforts by the Becker family, long established developers in Las Vegas. In 1963, just south of a shopping...
- Arizona Charlie's BoulderArizona Charlie's BoulderArizona Charlie's Boulder Hotel & Casino is a 301 room hotel and a locals casino located in Paradise, Nevada. Owned by American Casino & Entertainment Properties, it is on Boulder Highway between the Boulder Station and the Sam's Town.-History:...
- Stratosphere Las VegasStratosphere Las VegasStratosphere Las Vegas is a tower, hotel, and casino located on the Las Vegas Strip in Las Vegas, Nevada, United States. Its tower is also the tallest observation tower, and the 5th-tallest structure, in the United States, as well as being the tallest structure in Las Vegas.It is owned by Whitehall...