With D and Golden Gate as Collateral, What Happens if Circa Defaults?

If Credit Suisse holds the loan on Circa, and the D and Golden Gate are being used as collateral, how does this affect them?

It probably doesn't.

We spoke with a trusted Wall Street source and he said that, unless a casino is clearly not going to make it (he didn’t cite the decidedly unlucky Lucky Dragon, but we would), bankers and bondholders will be somewhat flexible coming out of the pandemic. Were Circa to underperform, its extenuating circumstances, such as capacity constraints, would be taken into account, and forbearances and payment restructuring would probably take place.

So we don't believe we have to worry about Credit Suisse seizing the D and Golden Gate if Circa defaults. Banks don’t want to be encumbered with those kinds of assets, as we’ve already seen with the Cosmopolitan, which Deutsche Bank, eager to get rid of it, sold at a loss. Credit Suisse would almost certainly rather keep proven managers like Derek Stevens in place than do something drastic in a crisis.

A crisis might be precipitated by a missed interest payment or disappointing financial returns, although at this point, as we say, that's unlikely. So even if Circa goes south, seizing the D and Golden Gate is a last resort. If Circa does well, which it seems to be doing so far, this is a non-issue.

No part of this answer may be reproduced or utilized in any form or by any means, electronic or mechanical, without the written permission of the publisher.

Have a question that hasn't been answered? Email us with your suggestion.

Missed a Question of the Day?

Have a Question?

Tomorrow's Question

Has Clark County ever considered legalizing prostitution?

Comments

Kevin Lewis Jan-25-2021

Circaling the drain

Circa was built on the premise that there was room in the market for yet another high-priced glitzy rip-you-off-at-every-turn megaresort. Because, after all, there's no such thing as too many places you can go to set fire to $100 bills.

But that was before the pandemic, and a dubious premise even then. Circa is surviving now because of its novelty value, but the bloom will be off the rose very soon when people get home and look at their credit card statements. The period where people just don't have as much money to piss away won't end for several years, and Circa won't survive it, not as deeply in hock as whatever conglomerate owns it went to build it.

Dave in Seattle. Jan-25-2021

Agree with Keven.

I'll still spend some $$ there, but not much!  I'm a downtown guy and I haven't seen it, yet. Maybe an expensive sandwich for $26.

gaattc2001 Jan-25-2021

I agree too;

but then I haven't been anywhere downtown in a long time.
Good to hear from you again, Kevin. Best wishes  and good vibes to you and everybody at LVA.

Llew Jan-26-2021

Circa

Oh, I don’t know. The Golden Nugget has been ripping people off for years and getting by just fine because, before Circa, it was the nicest Downtown property.  If Circa now holds that distinction, it should do just fine. Might kick the crap out of the GN, though.

Question of the Day - 25 January 2021

Comments