Moody's cuts Lake as Las Vegas

Moody's Investors Service said it lowered Lake at Las Vegas Joint Venture's corporate family rating to Caa1 from B3, probability-of-default rating to Caa2 from Caa1 and senior secured first-lien term loan to Caa1 (LGD3, 33%) from B3 (LGD3, 36%).

The outlook was revised to negative, thus concluding the review that began on Oct. 20, 2006.

The agency said the downgrade was triggered by the company's weak financial and operating performance during the fourth quarter of 2006 compared with prior Moody's expectations, by the continued weakness of the Las Vegas residential housing market and by the necessity for the company to seek substantial covenant relaxation.

The negative outlook is based on the agency's expectation that weakness in bulk lot sales to homebuilders will persist through 2008, with any pick up likely to be sluggish at first.

The ratings are supported by the long-term strength of the Las Vegas housing market, the successful track record of the owners in prior large developments, the substantial infrastructure investment already made in the project, the significant collateral in the structure, the unique attributes of the development's water rights and 320-acre private lake and the level of project acceptance achieved to date, Moody's said.

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