Pinnacle grants Boardwalk stores extra year on lease

Full story: Press of Atlantic City

Pinnacle Entertainment Inc. on Friday gave a one-year lease extension to some Boardwalk businesses originally scheduled to be demolished this fall for the company's $1.5 billion casino project.

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#1
Sep 20, 2008
 

Pinnacle grants Boardwalk stores extra year on lease
(Published: Tuesday, September 09, 2008)

ATLANTIC CITY - Pinnacle Entertainment Inc. on Friday gave a one-year lease extension to some Boardwalk businesses originally scheduled to be demolished this fall for the company's $1.5 billion casino project.

The businesses - the most notable of which is the Opa Restaurant - are located between Martin Luther King Boulevard and Indiana Avenue.

They had been given one last season to capitalize on the city's peak summer tourist trade.

Pinnacle Communications Director Carmen Gonzales said the company on Friday notified City Council of the lease extension, which expires in September 2009.

"I'm happy to report it," she said.

Tight credit markets have put the Pinnacle project in a holding pattern, although company officials told the state Casino Control Commission last month they intend to build the megaresort at some time in the future. Pinnacle has already invested $400 million in land, design work and other expenses, they said.

Pinnacle has assembled a development site of more than 20 acres, including the site where the old Sands Casino Hotel stood before it was imploded to make room for the proposed casino.

While the Boardwalk businesses have avoided demolition for another year, Gonzales said Pinnacle will continue with other work, including various demolition projects.

"We will work around them," she said. "There's plenty of other site work that can be worked on."

E-mail Thomas Barlas:

TBarlas@pressofac.com

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#2
Sep 20, 2008
 


Pinnacle terminates lease with Boardwalk businesses

(Published: Friday, September 19, 2008)

ATLANTIC CITY - The enthusiasm ignited two weeks ago among businesses along the 1700 block of the Boardwalk went cold Thursday.

A line of 17 Boardwalk businesses, most notably the Opa Bar and Grille, were set for demolition this fall before community concerns coaxed Pinnacle Atlantic City to offer a one-year extension on the lease. The decision allowed the businesses to stay open while the developer deals with significant project delays.

But Pinnacle's new terms of that extension quelled the collective relief and eventually led to the termination of the lease Thursday.

A spokesman for Pinnacle confirmed the news Thursday but pledged to commit to its plans not to immediately demolish the site and keep business open. Pinnacle will operate the block with direct leases to the other shops.

The question, however, is whether the current tenants can afford to stay.

George Siganos, president of Siganos Management, was operating the block, which stretches between Martin Luther King Boulevard and Indiana Avenue and fronts the Pinnacle site. He leased the entire block from Pinnacle, managed Opa and two other businesses along the stretch and subleased the others to different tenants.

He said he never fought Pinnacle over demolishing the site but hoped the delay-laden developer would allow the small businesses to keep making money until they were ready to build.

"This fight was more for my tenants," Siganos said Thursday.

He said he lost that battle when Pinnacle raised the yearly lease cost from $475,000 to $790,000. He said the agreement also would allow Pinnacle to force out him and his tenants at any time with just 60 days notice. If they remained after the deadline, Siganos would be charged $1 million per day.

Siganos made a counter offer that, among other changes, lowered the annual payments by $190,000.

Although he would not discuss the terms, Pinnacle spokesman Carl Zeitz said Siganos' counter offer was so low it would not allow the company to meet the annual property taxes and insurance fees on the shops.

"In addition, Siganos asked for a 10-day monthly rent payment grace period, despite frequently exceeding the 20-day grace period in its current lease over the past two years," Zeitz said.

Tight credit markets have put the $1.5 billion Pinnacle project in a holding pattern, although company officials told the state Casino Control Commission last month they intend to build the megaresort at some time in the future.

"Pinnacle is a publicly traded corporation obliged to our shareholders and their best interests to do business on an objective business-like basis that precludes subsidizing other businesses," Zeitz added. "In turning down Pinnacle's best efforts to reach fair and reasonable business terms, Siganos Properties forced this decision."

The block is not like many other blocks on the city's Boardwalk.

Siganos renovated the property in 2003, preventing the shops from deteriorating like so many others along the storied walkway. He said he sunk $3 million of his own money into the upgrades and maintenance.

Opa Bar and Grille, a Greek-influenced restaurant that opened about five years ago, anchors the stretch of businesses.

Sigano said his efforts to keep the block presentable undoubtedly would prevent him from visiting the site any time soon.

"I'll have to walk the other way," he said Thursday. "It's emotions. It will be too emotional."

E-mail Michael Clark:

Michael.Clark@pressofac.com

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#3
Sep 20, 2008
 
NEW LEASING HAS PINNACLE RENTERS IN A PREDICAMENT
Phaedra Laird ( plaird@nbc40.net )- 9/19/08 05:28 pm
Last Updated - 9/19/08 11:44 pm

ATLANTIC CITY--A group of boardwalk business owners in Atlantic City is worried about their future after learning they must negotiate a new lease agreement with Pinnacle Entertainment. It's a process that already has one entrepreneur closing his three businesses there.

"Very, very stressful," said Riaz Rajeut, owner of the Spotlight, "this is our livelihood, this is bread and butter for our family, for us." He and his fellow business owners on the 1700 block of the Atlantic City boardwalk says their lives are up in the air as they wait to negotiate new leases with Pinnacle Entertainment, who owns the land. "Pinnacle is not telling us anything so far," said Rajeut, "and we are still discussing, we are losing a lot of valuable time."

George Siganos, who owns OPA bar and grille and two other businesses, has been renting out the stretch and subletting to the other businesses, but no longer will come next month after rejecting Pinnacle's offer. His businesses will close by early October. "I cannot afford to pay the rent Pinnacle is asking," said Siganos.

Pinnacle is raising his rent from $475,000 a year to $790,000, and includes a clause saying they could terminate the lease at any time with only 60 days notice...and if they businesses fail to vacate in that amount of time, they'll be charged $1 million a day.
"It's not good," said Siganos, "it's not fair."

"That lease was based on fair and reasonable terms," said Carl Zeitz, spokesperson for Pinnacle, "it was rejected, so now Pinnacle is negotiating directly and sitting down directly with the tenants here."

All the subtenants will be meeting with Pinnacle over the next couple of weeks to discuss lease agreements. However, if one is not reached, they must vacate by October 15th. "If they can enter leases with Pinnacle, they can be right here on October 16th," said Zeitz.

Pinnacle wouldn't comment on how much rent the tenants would be charged, which is something business owners are stressing over. "The economy is very bad and we cannot afford to pay additional rent," said Rajeut.

"As long as we don't know how much rent they'll be asking,'til that moment, we are under pressure." said business owner, Mohammad Harron.

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