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    MARKET EDGES

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ATLANTIC CITY
I spent a hot Tuesday in Atlantic City. This may sound strange but it was refreshing to hear doom and gloom commentary from Company and Property level management personnel. There is no false optimism here. I may be falling for the contrarian just to be contrarian perspective but the Buyside, Sellside, and even industry professionals all seem to hate Atlantic City. Unlike Las Vegas, estimates have come way down and revenues and margins have been under pressure for awhile. Don't get me wrong: June was not good and the smoking ban will hit the market hard come October 1st. However, the big Pennsylvania impact will abate soon and AC could actually benefit from the Staycation effect discussed in my last portal posting.

TRUMP BONDS
The price of the Trump bonds are clearly not reflecting that the sale of the Marina will close. The bonds currently trade at 62.25 despite a deleveraging $316 million pending sale. Richard Fields and Coastal Marina can walk away from the deal for just $15 million which doesn't sound like a lot. However, the lawsuit between Trump and Fields would be reinstated upon termination. This lawsuit has legs and is a reason to believe the deal could go through. Not making a call yet on the probability of this transaction closing but I'll have more on this one later.

THE WATER CLUB
How did Borgata manage to build The Water Club for just $400 million. This is a beautiful facility with 800 rooms, an unbelievable spa, meeting space, five pools, additional retail, and a new restaurant. In my career I've enjoyed calling out questionable capital projects in this industry. I've got to say, though, this is the first project I've seen in awhile that looks like it could actually hit the magical 15% ROI. Boyd Gaming has been an easy target for the shorts and I've been there along with them. Despite my negative view on Echelon (not the quality of the facility but the ROI potential) and continued headwinds in the Las Vegas locals business, the free cash flow yield of over 20% is hard to ignore, particularly considering the potential of The Water Club. Not sure if we are there yet on BYD but stay tuned. It's getting interesting.