Crain’s New York Business – October 28, 2014
(Bloomberg) — Developer Larry Silverstein sold $1.6 billion of tax-exempt bonds to finance the construction of 3 World Trade Center, the largest-ever unrated deal in the municipal market.
Goldman Sachs Group Inc., which managed Tuesday’s offer, sold about $1.1 billion of senior bonds maturing in 30 years at a preliminary yield of 5%, or about 1.9 percentage points above benchmark debt, data compiled by Bloomberg show.
About $280 million of junior bonds due in 2034 and 2040 drew initial yields of 5.3% and 5.5%, respectively. The sale also included $231 million of 30-year subordinate debt priced at a preliminary 7.25%. Top-rated 30-year munis yielded 3.09% Tuesday, after setting a 21- month low of 2.78 percent on Oct. 16.
“They paid more yield than anything of its size in the market right now,” said Daniel Solender, head of munis at Jersey City, N.J.-based Lord Abbett & Co.
The issue for the 69-floor tower was delayed for more than a year after the Port Authority of New York & New Jersey, which owns the 16-acre World Trade Center site, balked at guaranteeing the debt while Mr. Silverstein waited for municipal borrowing costs to decline.
Bonds for 3 World Trade Center are backed by tenant leases and rents and secured by a mortgage. New York City and state will contribute $210 million and the Port Authority agreed to let Mr. Silverstein use $159 million of insurance proceeds from a $4.6 billion payout after the Sept. 11, 2001, terror attacks.
2018 Goal
About 20% of the building is leased. Advertising firm GroupM is the only tenant in the 2.5 million square-foot tower, which is expected to be finished in 2018.
Bond documents cite 118 investor risks, including the possibility the tower won’t be completed, insufficient tenant leases and the potential for terror attacks that could reduce revenue.
Mr. Silverstein, who signed a 99-year lease for the original towers six weeks before they were destroyed, issued the debt through New York Liberty Development Corp. The subsidiary of the state’s economic-development agency was created to sell tax- exempt debt as part of the Liberty Bond program, part of a federal economic package to help New York City recover from the 2001 attacks.
A spokesman for New York-based Silverstein Properties Inc. didn’t immediately return a request for comment on the bond sale.
Who says crime doesn’t pay? This slimeball should be dangling from a rope along with the rest of his co-conspirators, but since he’s a member of the tribe, he will continue to wallow in the proceeds from the murder of nearly 3 thousand innocent people. There is no justice in this country any longer. And you know what Mao said about justice.