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Issue link: https://www.ifoldsflip.com/i/62008
IN BUSINESS DINING, NIGHTLIFE EMPHASIZED IN REDEVELOPMENT PLANS SAHARA, FROM PAGE 7 Like a rating issued earlier by Moody's Investors Service, the S&P B-minus rating is deep in speculative or "junk" territory. But while Moody's outlook on the proposed $300 million loan debt is stable, Standard & Poor's gave it a market with many well-established EBITDA negative outlook. That could competitors and the vulnerability of new gaming projects drive up Nazarian's borrowing costs, because the negative outlook implies more risk for lenders and investors. "Given SLS' disadvantaged Northern Strip location, a highly competitive reflects costs, the the risks negative in achieving outlook a to uncertain demand and difficulties managing meaning initial sufficient ramp up in EBITDA to meet fixed charges," S&P analysts wrote in their report. is a profitability measure earnings before interest, taxes, depreciation amortization. Sahara 16 of Win the 2012 SNWA Landscape Awards Contest All finalists will receive a prize Entry is FREE after and The budget-oriented closed May 59 years operations, with Nazarian saying it had grown uncompetitive. a Now, he's hoping to reopen it as luxury or near-luxury property without its roller coaster and with 1,622 rooms, down from the 1,720 rooms the property had when it closed. Standard & Poor's, in its report, revealed more details about SLS that confirm it would be as much about dining and nightlife as about gambling. This is no surprise, given Nazarian's ownership of NAZARIAN the Los Angeles-based SBE Entertainment hotel, restaurant and nightclub company. S&P said the property would have 12 restaurants seating 1,671 people, 8,000 square feet of bars and lounges and four nightlife venues with a capacity for 5,000 people. Observers wonder whether a concept will work at such the Sahara location, given its lack of foot traffic and remoteness from the hottest parts of the Strip, the idled status of the nearby Fontainebleau and Echelon resort projects, the debt default at the nearby LVH (formerly Las Vegas Hilton) and the inability — so far — of the Cosmopolitan resort to make money with its dining and entertainment orientation. Entries accepted for professional and homeowners. Landscapes are judged on: Efficient water useÛÝÛPlant selectionÛÝÛDesign ÝÛAesthetics Entry Deadline: May 7, 2012 One category per entry. Apply online at snwa.com or call 258-2417 for an application package. 8 Still, with business picking up on the Strip, both Standard & Poor's and Moody's agree the market could absorb another 1,622 hotel rooms. What they're questioning is whether the Sahara is the right location for those rooms. They're also questioning if Nazarian will have an adequate capital structure to meet debt obligations that include the $300 million loan plus $115 million in junior financing. The debt is on top of $329 million in equity contributed or to be contributed by Nazarian and his partner, a Stockbridge real estate fund. S&P, in its report, called the SLS business risk profile "vulnerable" and said it's "highly leveraged." Standard & Poor's said that with its nightlife offerings, SLS could fetch high weekend hotel room rates of $130-$140 but that it would have to substantially lower midweek room rates given its disadvantaged location and limited convention capacity. | 16 APRIL 2012 |