SL Green requesting extension of loan for Caesars Casino construction site
In the bustling heart of New York City, SL Green's 1515 Broadway property, currently leased and generating cash flow, finds itself at a critical juncture. Recent developments suggest a potential refinance of the property, which could result in a higher interest rate, according to research firms.
The current interest rate on the property, below 4%, has been a boon for SL Green. However, the company is seeking an extension on a $743 million loan due in March 2025, tied to the 1515 Broadway property. The loan entered special servicing in late October 2024, a move that often signals default is imminent.
SL Green's overall net debt, including unconsolidated joint venture debt, was $10.1 billion as of the end of Q2 2024, according to Morningstar analyst Suryansh Sharma. The loan extension request comes amidst SL Green's large debt burden, common in the real estate industry.
Despite the financial strain, SL Green's debt obligations on the 1515 Broadway property are not straining the landlord, as the property is fully leased and generates ample cash flow, with overall performance being 'stellar,' Morningstar's report states.
The tenant base at 1515 Broadway is heavily dependent on CBS News parent Paramount, which controls nearly all the space at the property. However, Paramount announced layoffs in August, and the company is currently involved in a testy takeover battle. This could potentially impact the cash flow of the 1515 Broadway property.
Potential creditors may demand to see more tenants at the 1515 Broadway building or 'tax' SL Green for the property's dependence on Paramount. SL Green, however, is current on its mortgage payments on the property.
In a bid to diversify its income sources, SL Green announced in October 2022 a partnership with Caesars Entertainment to open a casino in Times Square, with Jay-Z's Roc Nation joining the consortium in November 2022. The proposed casino, if approved, would occupy the space currently used by the Miskoff Theater, home to 'The Lion King,' one of the longest-running shows in Broadway history.
The Federal Reserve is expected to continue cutting borrowing costs in the months ahead, which could buffer a potential interest rate increase. This could provide some relief to SL Green as they navigate the refinancing of the 1515 Broadway property.
SL Green currently has approximately $0.4 billion of excess cash and investments on its balance sheet, offering a cushion in these challenging times. The bank that granted the loan to SL Green for the New York real estate project, 1515 Broadway, and is discussing the possibility of extending the loan maturity in March 2025 is Barclays.
SL Green operates in the real estate industry, which is capital-intensive and often involves significant debt. The company's ability to navigate these financial complexities will be crucial in the coming months, as they seek to secure the future of the 1515 Broadway property.
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