SL Green Seeking Loan Extension for Site of Proposed Caesars Casino

Posted on: November 13, 2024, 09:43h. 

Last updated on: November 14, 2024, 10:26h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

SL Green (NYSE: SLG), the real estate partner in a proposed effort to bring a casino hotel to Times Square, is looking for an extension on a $743 million loan tied to the New York City property.

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Times Square in New York City. SL Green is seeking a loan extension for 1515 Broadway, the proposed home of a Caesars casino. (Image: Shutterstock)

A recent report from Morningstar indicated the loan on 1515 Broadway entered special servicing in late October, implying that default is imminent. However, the real estate investment trust (REIT) is seeking an extension on the loan, which comes due in March.

The Morningstar report noted the property is fully leased, generating ample cash flow, and that its overall performance is “stellar.” Loan data confirm SL Green is current on its mortgage payments on the property and that the landlord isn’t strained by its debt obligations there.

In October 2022, SL Green announced it is partnering with Caesars Entertainment in a quest to open a casino in Times Square. Jay-Z’s Roc Nation entertainment agency joined the consortium the following month. The group pitched at a $4 billion casino hotel at 1515 Broadway.

SL Green Has Big Debt Burden

Real estate is a capital-intensive industry, and as is the case with most of its counterparts, SL Green carries significant debt.

The company’s share of debt, which also includes its share of unconsolidated joint venture debt, was $10.5 billion, and the company had approximately $0.4 billion of excess cash and investments on its balance sheet, resulting in net debt of $10.1 billion as of the end of the second quarter of 2024,” wrote Morningstar analyst Suryansh Sharma.

The research firm notes that SL Green’s current interest rate on 1515 Broadway is below 4%, and a refinance of the property could result in a higher rate. A potential increase could be buffered by declining interest rates and the expectation that the Federal Reserve will continue cutting borrowing costs in the months ahead.

New York officials aren’t expected to award the three downstate casino licenses — something that could help SL Green should Caesars win one — before the end of 2025.

Drama at 1515 Broadway

SL Green’s overall tenant base is diversified, but that’s not the case at 1515 Broadway. CBS News parent Paramount controls nearly all the space at the property, and that company announced layoffs in August, including some workers at the SL Green buildings. Additionally, Paramount is in the midst of a testy takeover battle.

It’s possible potential creditors may demand to see more tenants at the building or “tax” SL Green for the property’s dependence on Paramount.

As for the proposed Caesars casino, should that project win approval from New York regulators, SL Green has said the gaming venue would occupy the space currently used by the Miskoff Theater, which is currently home to “The Lion King,” one of the longest-running shows in Broadway history.