Moody's: Lake at Las Vegas loans Ba3, B1

Moody's Investors Service said it assigned ratings to Lake at Las Vegas Joint Venture, including a Ba3 to the proposed $360 million senior secured first-lien term loan due Oct. 15, 2009, a B1 to the proposed $100 million senior secured second-lien term loan due Oct. 15, 2010, a B1 senior implied rating, and a B2 issuer rating.

The outlook is stable.

Net proceeds from the $460 million of term loans will be largely used to provide a return of capital to the private equity holders. As such, these term loan proceeds effectively return to the owners several years of future cash flows that will be substantially in excess of the track record demonstrated prior to this year. If these expectations about future cash flows should not be met, debt service payments could be jeopardized.

Moody's said the ratings incorporate the short demonstrated track record of the project and limited historical audited financials provided by the company, the location and geographic and demographic concentration of the development, market risk, indications of speculative excess in the Las Vegas market, and the negative net worth of the company after adjusting for the dividend to the owners.

At the same time, the ratings acknowledge the 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 over 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, the agency said.

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