S&P cuts Stockbridge/SBE to CCC, loan to B-

Standard & Poor's said it lowered its corporate credit rating on Stockbridge/SBE Investment Co. LLC, owner of the SLS Las Vegas, to CCC from B-.

The outlook is negative.

At the same time, the agency lowered its issue-level ratings on the company's subsidiary Stockbridge/SBE Holdings LLC's $150 million first-lien term loan to B- from B+. The recovery rating remains 1, reflecting an expectation for very high (90% to 100%) recovery of principal for lenders in the event of a payment default.

"The downgrade reflects significantly weaker-than-expected operating performance following SLS Las Vegas' opening in August 2014 and our view that the property will have difficulty ramping up quickly enough to a level of EBITDA generation that is sufficient to cover its fixed charges," S&P credit analyst Stephen Pagano said in a news release.

"Our CCC rating on Stockbridge also reflects the property's disadvantaged northern Las Vegas Strip location, a highly competitive market with many well-established operators, and the company's reliance on a single property for cash flow generation."

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