Moody's cuts Lake Las Vegas loan

Moody's Investors Service, in response to the proposed $100 million upsizing of the term loan financing being arranged for Lake at Las Vegas Joint Venture, lowered by one notch each of the first-time ratings that had been assigned on Oct. 7 to Lake Las Vegas.

The new ratings are B1, lowered from Ba3, on the senior secured first-lien term loan, which was upsized by $75 million to $435 million; B2, lowered from B1, on the senior secured second-lien term loan, which was upsized by $25 million to $125 million; and B2 and B3, lowered from B1 and B2, on the senior implied rating and senior unsecured issuer rating, respectively.

The outlook remains stable.

Net proceeds of the upsized term loans will be used to provide an additional return of capital to the private equity holders.

Moody's said the ratings incorporate the short demonstrated track record of the project and limited historical 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 dividends 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.

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