KBRA Publishes CMBS Research: “Upping the Ante on the Strip”

NEW YORK--()--Kroll Bond Rating Agency (KBRA) releases a research report entitled, “Upping the Ante on the Strip.”

In the report, KBRA reviews and highlights recent trends and CMBS securitizations on the Las Vegas Strip. While CMBS deal activity on the Strip between 2011 and 2014 consisted of retail collateral, in 2015 that changed with the first CMBS casino/hotel securitization since 2007. Then two years later, in 2017, an unprecedented $2.9 billion of mortgage debt secured by Las Vegas casino/hotel collateral was securitized.

Highlights of the research report include:

  • The debt in 2017 was placed on Caesars Palace ($1.55 billion) and The Cosmopolitan ($1.38 billion) in single-asset single-borrower transactions.
  • While “What happens in Vegas stays in Vegas,” it’s no secret that visitor volume and gaming revenue slowed in 2017.
  • In 2017, the Strip had its first annual visitation decline (-1.7%) in four years.
  • Gaming revenue on the Strip has been flat going from $ 6.37 billion in 2014 to $6.46 billion for full year 2017.
  • Las Vegas has 5,125 rooms under construction as of October 2017 compared to 3,979 rooms in October 2016, an increase of 28.8%.
  • There could be some pricing pressure as new supply comes on-line during a period of slowing visitor volume.
  • While we believe there is still room to run in the current expansion, a risk-on approach this late in the cycle may be a gamble.

In addition to the Las Vegas market, we’ve also included our observations on casino/hotel and securitization activity on Atlantic City’s Boardwalk.

Please feel free to reach out to us with any comments or questions on our report. To view the research report, please click here.

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical Contacts:
Kroll Bond Rating Agency
Larry Kay, 646-731-2452
Senior Director
lkay@kbra.com
or
Taeho Lee, 646-731-2317
Associate
tlee@kbra.com
or
Eric Thompson, 646-731-2355
Senior Managing Director
ethompson@kbra.com

Contacts

Analytical Contacts:
Kroll Bond Rating Agency
Larry Kay, 646-731-2452
Senior Director
lkay@kbra.com
or
Taeho Lee, 646-731-2317
Associate
tlee@kbra.com
or
Eric Thompson, 646-731-2355
Senior Managing Director
ethompson@kbra.com