The Real Deal New York

Chang bets big on Trump Entertainment

February 29, 2008 02:35PM
By David Jones

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New York hotel developer Sam Chang has quietly and aggressively increased his stake in Trump Entertainment Resorts Inc.
 
Chang, chairman of Great Neck, N.Y.-based McSam Hotel Group, has increased his stake in Trump Entertainment to 7.5 percent, making him one of the Atlantic City casino operator’s top four stakeholders, according to a filing with federal regulators earlier this month.
 
Trump Entertainment officials said they have had no contact with Chang, who could not be reached comment.
 
“Certainly it’s a positive sign of [Chang's] substantial belief in the company’s potential,” Trump Entertainment spokesman Tom Hickey told the Press of Atlantic City.

As one of New York’s largest hotel developers, Chang has about 4,000 hotel rooms under development. He has agreements with Holiday Inn, Candlewood Suites, Sheraton and other brands.
 
Chang has been branching out from the hotel market. He recently acquired property in the East Village as part of a plan to build more condominiums. Chang has also sold two unfinished Manhattan hotels to Magna Hospitality Group this month, as The Real Deal reported earlier this week.

Chang’s investment in Trump Entertainment comes at a critical time for the Atlantic City gaming industry. Casino revenue fell 5.7 percent to $4.92 billion last year, according to the New Jersey Casino Control Commission.
 
The drop, Atlantic City’s first-ever annual decline in gaming revenue, was blamed on a partial ban on smoking in New Jersey casinos and competition from new gaming venues in Pennsylvania and upstate New York.
 
“The market right now is in a state of definite and irreversible transition from a local day-trip market to a regional destination resort,” said Michael Pollock, managing director of Spectrum Gaming Group. “From an investor standpoint, it’s going to take people with a very long time horizon.”

For the first nine months of 2007, Trump Entertainment lost $15 million, or 48 cents a share, compared with a loss of $8.8 million, or 29 cents a share one year earlier. Revenue fell to $759.6 million from $782.1 million a year earlier.
 
Trump Entertainment attempted to sell itself last year. It entered talks with a group led by former Trump Taj Mahal President Dennis Gomes and Morris Bailey, the co-principal of Manhattan-based JEMB Realty. After those talks broke down in July 2007, Trump Entertainment announced it had taken its properties off the market.
 
The company has seen some changes at the top. Last year, it named former Caesars Palace president Mark Juliano as its new chief executive and placed Ivanka Trump, Donald Trump’s daughter, on its board of directors.

Trump Entertainment includes Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino and Trump Marina. Trump Taj Majal is slated to open a new 39-story hotel later this year with 786 rooms.
 

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