SL Green (NYSE: SLG), the real estate partner involved in an ambitious project to bring a casino hotel to Times Square, is reportedly seeking an extension on a $743 million loan connected to a New York City property. The property in question, located at 1515 Broadway, has attracted attention as the proposed site for a Caesars casino.
Recent insights from a Morningstar report revealed that the loan for 1515 Broadway entered special servicing in late October, signaling an imminent default. Despite this, SL Green is actively working to secure an extension, with the loan scheduled to mature in March. Interestingly, the property is fully leased and generates substantial cash flow, which the report describes as “stellar.” Loan data confirm that SL Green is current on its mortgage payments and is not burdened by its debt obligations for this asset.
In October 2022, SL Green announced a partnership with Caesars Entertainment to bid for a casino in Times Square. By the following month, Jay-Z’s Roc Nation entertainment agency had also joined the consortium. The group has outlined plans for a $4 billion casino hotel at the prestigious 1515 Broadway address.
While the real estate industry is inherently capital-intensive, SL Green carries substantial debt like many of its peers. According to Morningstar analyst Suryansh Sharma, the company’s debt, which includes its share of unconsolidated joint venture debt, was $10.5 billion as of the end of the second quarter of 2024, with around $0.4 billion in excess cash and investments, leading to a net debt of $10.1 billion.
The current interest rate on 1515 Broadway is below 4%, and a refinance could lead to a higher rate. However, this potential increase might be mitigated by declining interest rates and expectations that the Federal Reserve will continue to cut borrowing costs in the near future. As for New York’s allocation of three downstate casino licenses, a decision that could significantly benefit SL Green if Caesars wins one, it’s unlikely that the licenses will be awarded before the end of 2025.
At 1515 Broadway, the building’s tenant base is notably concentrated, with CBS News parent company Paramount controlling nearly all the space. Paramount’s announcement of layoffs in August, which included positions at SL Green buildings, adds another layer of complexity, as the company navigates a contentious takeover battle. Potential creditors might seek a more diversified tenant base or penalize SL Green for the property’s reliance on Paramount.
Regarding the proposed Caesars casino, should it gain approval from New York regulators, the gaming venue is slated to occupy space currently held by the Miskoff Theater. This theater is famous for hosting “The Lion King,” one of Broadway’s longest-running and most beloved shows.
