SugarHouse developer eyes a role in Pittsburgh

Neil G. Bluhm, the Chicago billionaire who is bankrolling the development of a $700 million slots parlor on the Philadelphia waterfront, is pursuing a deal to help Don Barden financially in building his casino in Pittsburgh, according to a partner of Bluhm's.

Stymied by legal controversy and neighborhood opposition in Philadelphia, Bluhm now is looking to expand his casino holdings in another part of the state.

Bluhm and his real estate private-equity fund, Walton Street Capital L.L.C., have entered into a deal with Barden to help him finance the $780 million Pittsburgh Majestic Star Casino, which has been beset with financial problems.

"We just think potentially it's a great opportunity, and we are working on it," Eric Mogentale, managing principal of Walton Street Capital, said last night. "It's not a done deal.

"We are working very hard to close the transaction as quickly as we can to make it happen," he said.

Efforts to reach Bob Oltmanns, the spokesman for Barden, were unsuccessful last night.

Pittsburgh city officials announced yesterday that Barden had agreed to shut down construction for at least two weeks because funding for the project had dried up, and because Barden has not been able to make payments owed to contractor Keating Building Corp., whose chairman and chief executive officer, Daniel J. Keating, is a major investor in the proposed SugarHouse casino in Philadelphia.

Mogentale said last night in an interview that Bluhm had agreed to put up $120 million in equity financing so Barden could continue construction.

Bluhm is majority owner and Walton Street Capital is listed as an investor in the proposed SugarHouse Casino on the Delaware River waterfront in Philadelphia. Construction on the project has been stalled by legal issues and neighborhood opposition since December 2006, when Bluhm and his team won one of two city licenses to build a stand-alone slots parlor in Philadelphia.

The latest legal issue has been over riparian rights - rights to use submerged land along the Delaware for development - and who owns them. The Pennsylvania Supreme Court has yet to rule on the matter pertaining to the SugarHouse Casino. Construction has been put on hold for the Foxwoods casino, also planned for the waterfront, because of legal and political issues.

A group of lawmakers in Harrisburg introduced legislation earlier this year to select alternative sites for the two controversial casinos - an option that neither SugarHouse nor Foxwoods will entertain.

Bluhm is a heavy hitter in Chicago, his hometown. He is active in the city's arts and philanthropic communities.

Bluhm and former senior executives of JMB Realty Corp. formed Walton Street Capital in December 1994 to focus exclusively on investing their own capital in real estate in partnership with institutional and private investors. It has raised more than $5 billion in equity and has about $12 billion in assets.

Bluhm's latest casino investment would have to be reviewed by the Pennsylvania Gaming Control Board.

Under Pennsylvania's gambling law, a majority owner of one casino site can have up to a 33.3 percent equity stake in another project, according to state gaming board spokesman Doug Harbach.