CCC approves sale of Hilton to Colony
As reported by Press of Atlantic City

Atlantic City - Built by the golden boy of gaming, it was once Atlantic City's must-see attraction - an opulent hangout for high rollers and the "in" crowd.

But after celebrity owner Steve Wynn sold the place in the late 1980s, the casino lost its panache and languished under new corporate ownership and a series of name changes.

Now the Golden Nugget-turned-Hilton is changing hands again. New owner Colony Capital LLC, which rejuvenated Resorts Atlantic City after buying it four years ago, is promising to do the same thing with the fading Atlantic City Hilton Casino Resort.

The state Casino Control Commission gave unanimous approval for the deal Thursday, moving a New Jersey affiliate of Colony Capital closer to taking over management and ownership of the property. Colony expects to take charge of the 800-room Hilton in late April after finalizing the purchase.

Giving a sneak preview of their plans, Colony officials said they will expand the property and refine its marketing strategy, although the casino will continue to carry the Hilton name.

"There's a lot of land that can be developed around it," Nicholas L. Ribis, a veteran Atlantic City gaming executive who serves as vice chairman of Resorts, told the Casino Control Commission.

Thomas J. Barrack Jr., chairman and chief executive officer of Colony Capital, said the Hilton acquisition will help his company capitalize on a second wave of growth sweeping the Atlantic City casino industry.

"I think that Atlantic City is in the same place that Las Vegas was 11 years ago," Barrack said.

In its current configuration, the Hilton has the least amount of gaming space and the second-smallest number of hotel rooms among Atlantic City's 12 casinos. It is further limited by its somewhat remote location at the southern end of the Boardwalk, blocks away from the heart of the casino zone.

Colony's acquisition includes adjacent land along Pacific Avenue, between Sovereign and Montpelier avenues, that is being used for Hilton parking. In addition, Colony will take ownership of the former Atlantic City High School site at the foot of Albany Avenue and an oceanfront parcel at Albany and the Boardwalk.

Ribis said the Hilton will not continue using valuable land for parking, but gave no other details about the type of expansion project Colony has in mind.

"It's certainly not going to sit there as a parking lot. It doesn't make sense," he said.

Colony expects to submit expansion plans within 30 to 45 days to the Casino Reinvestment Development Authority, the state agency that uses gaming revenue for housing and economic development projects. The CRDA has helped the casino industry build thousands of new hotel rooms and other nongaming attractions in an effort to broaden Atlantic City's appeal beyond gambling.

The Hilton hasn't undergone a major expansion since 1997, when it completed a $50 million, 300-room hotel tower. It has been overshadowed by its larger rivals and its once-glamorous 1980s' brass-and-glass decor seems woefully outdated.

Although it was known for its ritzy ambiance and high-roller hipness in its days as the Golden Nugget, the casino seemed to lose its cachet after Wynn sold it to Bally Manufacturing in 1987 for $440 million. A series of name changes followed, including Bally's Grand and The Grand.

The Hilton moniker was put on the casino after Hilton Hotels Corp. bought Bally Entertainment, formerly Bally Manufacturing. Hilton Hotels later spun off its casino operations into a new company called Park Place Entertainment, which is now known as Caesars Entertainment Inc.

Caesars Entertainment is being acquired by Harrah's Entertainment Inc. this year in a $9.4 billion merger that will create the world's largest gaming company. Caesars and Harrah's agreed to sell the Hilton and three other casinos in Tunica, Miss., and East Chicago, Ind., to Colony Capital for $1.24 billion to ease regulatory concerns that the combined company could monopolize certain gaming jurisdictions, including Atlantic City.

Pointing to the Hilton's declining financial performance in recent years, Ribis speculated that the gaming hall suffered because Caesars Entertainment concentrated on its two other casinos in town, the much-larger Bally's Atlantic City and Caesars Atlantic City.

"I think it's a property that has been slightly ignored by its parent company," he said.

Colony Capital, a private investment firm based in Los Angeles, paid about $513 million for the Hilton, gaming officials said. Colony is now the fourth-largest gaming company in the world. Its expanding portfolio includes the purchase of the Las Vegas Hilton last year for $280 million.

Colony has specialized in rejuvenating underutilized casinos and expects the Atlantic City Hilton to fit in with that strategy. It has revived the Las Vegas Hilton in only 10 months of operation and gave the aging Resorts a facelift last summer by adding a 400-room hotel tower costing $125 million.