CBAC Borrower LLC

Overview Key strengths Key risks CBAC's market in the Baltimore/Washington, D.C. area is deep and has favorable demographics. Elevated leverage in the mid- to high- 7x area for next two years. There are high barriers for competitors to enter the market given limited gaming licenses. The company has a weak position in a highly competitive gaming market. Company benefits from being a part of the Caesars Rewards network. High exposure to event risk and EBITDA volatility as a single casino operator. A high gaming tax results in a modestly weaker EBITDA margins than those of its commercial gaming peers. Horseshoe Baltimore?s gross gaming revenues through the first eight months of 2022 have kept pace year over year but remain about

...We expect CBAC Borrower LLC's leverage to remain elevated in the mid- to high-7x area through 2023 amid increasing macroeconomic risks. Horseshoe Baltimore's gross gaming revenues through the first eight months of 2022 have kept pace year over year but remain about 13% below 2019 (as reported by the Maryland Gaming Commission) primarily because of a slower recovery in table game revenue. Through August 2022, video lottery terminal (VLT) revenue fell 6% (or $5.9 million) compared with the corresponding periods in 2021. Higher table game revenue of 14% (or $6.5 million) offset this but remains 24% below 2019. Horseshoe Baltimore's table game revenue recovery initially lagged its VLT recovery because of stricter operating restrictions given its location in downtown Baltimore, which could have led customers to frequent other competing casinos in the market. In 2022, we believe the resumption of normal operations for alternate entertainment options, depleted stimulus funds, and inflationary...

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