Sellers decided to stop the sale of a luxury mall in Atlantic City after they failed to see the expected bid prices at an auction. The 300,000-sqft Pier Shop at Caesars was once valued at $ 210 million, but in an auction conducted by online portal auction.com, it managed to draw a bid of only $ 25 million, Bloomberg reported.
"There was a kind of a macabre fascination," Lea Overby, a debt strategist at Nomura, told Bloomberg. "People were surprised the bids were coming in so low. People had it in their heads that it was going to come in closer to the appraised value. Most people in the CMBS (Commercial mortgage-backed security) market have gotten the sense that this asset really is near worthless."
On what to do with the property now, the C-III is left with limited options - either they could sell the property close to the bidding price, or improve the property, reported the Wall Street Journal quoting Harris Trifon, head of commercial- and asset-backed bond research at Deutsche Bank in New York.
"The potential loss on the (CMBS) serves as a useful reminder to investors that despite the euphoric sentiment in markets, these are still bonds with meaningful credit risk," Trifon told the Wall Street Journal.
At present, the Atlantic City mall is held by loan servicer C-III Capital Partners and managed by Cushman and Wakefield after its original owner Taubman Centers Inc. defaulted on the payment of a $150 million mortgage.
Unfortunately, the value of this commercial establishment has constantly been depreciating since it opened in 2006. In 2011 the Atlantic City mall was valued only at $56.5 million, a steep drop from the $210 million it was valued at in 2007. Last year also saw the closure of several operations in this luxury retail complex. Game On! and Trinity Irish Pub and Carvery are just few of the names.
A report on the Press of Atlantic City attributed location as one of the reasons for these establishments shutting shop at the Pier.
However, the Pier Shops still have presence of luxury brands such as Burberry, Louis Vuitton, Gucci and Tiffany and Co. The David Rockwell-designed interior features panoramic views of the Atlantic Ocean. Visitors can also enjoy unique sensory experiences throughout the day, which includes the $7 million water show.
