Eye on Business: Report says Las Vegas Hard Rock aims to avoid foreclosure

DAVE DREESZEN ddreeszen@siouxcityjournal.com | Posted: Thursday, January 16, 2014 4:45 pm

The owner of the Hard Rock Hotel & Casino Las Vegas is seeking options to avoid missing a March mortgage interest payment, a financial news service reported Tuesday.

Failure to pay could jeopardize the future of the company, called Bref HR LLC, and lead to foreclosure, according to the online Mergers & Acquisitions story.

Bref, a division of Brookfield Asset Management Inc., owns the entertainment resort, which is managed by a subsidiary of Las Vegas-based Warner Gaming LLC.

Another Warner subsidiary, Sioux City Entertainment, is developing the Hard Rock Hotel & Casino Sioux City.  Construction on the $128.5 million project in downtown Sioux City, is scheduled for completion late this summer.

Affiliates of Brookfield Financial formed Bref HR LLC in February 2011 to buy the interests of HRHH JV Junior Mezz LLC, which indirectly owned the Hard Rock Hotel & Casino Las Vegas, according to Mergers & Acquisitions. HRHH’s interests were assigned to Bref in lieu of foreclosure after HRHH had defaulted on a mortgage loan provided by Brookfield.

"In March 2011, the company entered into a second mortgage loan agreement with Brookfield Financial for $30 million, pledging land, buildings, improvements, equipment and fixtures as collateral. The mortgage matures on March 1, 2018 and has an interest rate of 15 percent, payable at maturity."

"In a Dec. 23 filing with the U.S. Securities and Exchange Commission, Bref raised substantial doubt about the company’s ability to survive, anticipating that it will not have the funds to meet a payment-in-kind interest installment due on March 1." 

"Bref’s ability to continue depends on restructuring debt, obtaining additional financing or securing lender approval to use available cash reserves to make the interest payment. If the company misses the payment, the lender has the option to accelerate the loan, which could result in foreclosure."

The byline story by Allison Collins noted that several hotels and casinos in the Las Vegas area have suffered from financial woes, including the the still-unfinished Fontainebleau Las Vegas, which sought bankruptcy protection in 2009, and the Riviera, which filed for bankruptcy protection in 2010, eventually restructuring debt and issuing equity to lenders.