The RGJ broke the story of the impending default on the Silver Legacy Deed of Trust unless a modification can be worked out this month.  The original Dead of Trust is from 2002 in the amount of $180M and the term has been extended a couple times, and a $142.8M balloon is due if no additional extensions or modifications are agreed upon.  The loan is at a bit over 10% interest, or something like $1.5M per month in payments.

The Silver Legacy is a joint venture between the Eldorado and the Circus Circus.  The Grand Sierra Resort recently sold for $42M, and the Siena sold for $3.9M.  Just so talking points to remember.

–  Circus Circus – Currently owned by MGM Resorts International, I can’t find any direct debt on the project.  But the parent company is awash in debt, and the Circus is slowly bleeding to death due to lack of attention.  When was the last remodel or refreshing of the rooms?  I hope since this shot!

–  Eldorado – They concluded a refinancing with Capital One (Peggy) this past June on  $180M and $30M loans.

–  Harrah’s – Can you believe a $5B Deed of Trust is in place through BofA?  There is no way to know how much of this credit line has been used and how much is cross collateralized with other Harrah’s / Caesar’s properties.  But after a highly unusual IPO this week, the entire corporation is only valued at $1.9B after doubling in price.  Harrah’s has been investing in the property, at least on the food service end.  There is no truth to the rumor that Hash House a Go Go is a joint venture with Renown’s cardiac care division!

I think the Silver Legacy is safe.  That’s not to say that it won’t be going into default or even bankruptcy to get the unstable Circus Circus out of the joint venture and make financing possible.  That comp will kill the Circus Circus, which will probably be sold by its cash poor parent company, and probably to the Carano clan / Eldorado / Silver Legacy.   Harrah’s is the wild card.  Depending on what the financing package really is, it looks unsustainable in view of its corporate volatility.  And that would be a big black hole to fill in downtown Reno to fill.

Yeah, I know that all of the Silver Legacy rooms have recently been remodeled, but I can’t help but end this post with a classic photo from the web:  “My Room at the Silver Legacy”: