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December 15, 2009
Ratner Wins Bond Financing for Nets Arena
NY Observer
by Eliot Brown
Doubts are fading for Bruce Ratner's new Nets arena planned for Brooklyn.
Mr. Ratner, owner of the Nets, has successfully marketed $511 million in tax-free bonds to build the arena, clearing the largest remaining hurdle to the project. Mr. Ratner's firm, Forest City Ratner, announced the news Tuesday afternoon, saying the bonds were priced at 6.48 percent.
The bond sale comes amid a last-minute race to finalize numerous parts of the larger Atlantic Yards project before the end of the year, when an IRS exemption expires. Since the summer, Mr. Ratner has redesigned the arena; renegotiated a land sale in a deal rather favorable to him; renegotiated a subsidy deal with the state; nearly finalized a revised subsidy deal with the city; tentatively sold the Nets and 45 percent of the arena development to Russian billionaire Mikhail Prokhorov; and now sold $511 million in tax-free bonds.
He still needs to raise $146 million in taxable bonds, and put in more than $200 million in equity from Forest City. The arena is to cost more than $900 million, and is planned to be the first component to rise on the 22-acre Atlantic Yards site.
There are numerous lawsuits and legal actions outstanding that challenge the project.
Related coverage...
NorthJersey.com, Atlantic Yards project developers complete bond sales
"The interest in the arena bond offering was beyond our expectations," said Nets principal owner and lead project developer Bruce Ratner, who added that orders from institutional investors across the board were almost four times the supply of bonds. "Even more importantly, the overwhelming support from investors is a good sign of confidence in this project and in the city."
Bloomberg.com, Brooklyn Arena Sells $511 Million in Tax-Exempt Bonds
Brooklyn Arena Local Development Corp., the state arm created to help finance a new basketball facility in New York City, sold $511 million of tax-exempt bonds at yields lower than a comparably rated deal last week.
Bonds due in 2040 paying 6.25 percent interest were priced to yield 6.35 percent, 65 basis points less than a comparable maturity issued by Texas Private Activity Bond Surface Transportation Corp. last week, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.
...The arena bonds are rated at the lowest investment grades by Standard & Poor’s and Moody’s Investors Service, one level higher than high-risk, high-yield junk status.
...Investors placed almost $4 of orders for every $1 of bonds offered, allowing underwriters to reduce yields about 15 basis points from initial levels. The overall interest was 6.48 percent, according to the release from Ratner.
Underwriters were led by Goldman Sachs Group Inc. and Barclays Plc, which bought naming rights to the facility.
“It was tremendously received by the marketplace,” said Greg Carey, a managing director in Goldman Sachs’ public sector and infrastructure group, in an interview today. “We had 48 major institutions participating in the transaction.”
Atlantic Yards Report, Ratner Wins Bond Financing for Nets Arena
Well, with the sale of tax-exempt bonds and a planned "master closing" next week, the Atlantic Yards arena is coming ever closer to construction.
Crain's NY Business, Atlantic Yards bonds sell for $511M
Securing financing will be the last major hurdle to starting construction on the arena, which is the centerpiece of Forest City Ratner's $4.9 billion plan to redevelop the Atlantic Yards. Last month, the developer overcame the other major obstacle when New York's highest court gave the state permission to use eminent domain to seize property on the 22-acre site that Forest City doesn't already control. Forest City plans to have the arena open by the 2011/2012 basketball season.
NetsDaily, Brooklyn Bonds Get Sold
One more hurdle has been cleared for the Nets’ move to Brooklyn. More than $500 million of tax-exempt bonds for the team’s new arena were put on sale Tuesday morning, and they were sold quickly. “There was a strong appetite for the bonds,” said a bond analyst. The master closing for the Atlantic Yards property, along with the start of condemnation of the parcels that FCR doesn’t already own, is expected next week.
The Brooklyn Blog [NY Post], Atlantic Yards passes funding obstacle, clearing way for Brooklyn Nets arena
Ratner next week is now set to complete the “master closing” for Atlantic Yards with city and state agencies.
He can now also close on the sale of 80 percent interest in the Nets to the Russian billionaire playboy Mikhail Prokhorov, who is also buying 45 percent interest in the planned Barclays Center arena.
Ratner and his partners would also invest their own cash to help pay off the arena, while tapping into a $131 million city subsidy.
NoLandGrab: Prokhorov still needs approval from NBA owners, but that would appear to be a formality, given the support of Commissioner David Stern and Ratner's stellar track record in the ownership club.
NetsAreScorching, BONDS FOR BROOKLYN ARENA SELL FAST
In a show of just how divisive this project has been, check out these two comments from the Times’ comments section:
This is great news. All of the NIMBY opposition and consequent increased costs have not stopped this beneficial economic development project from moving forward.
And:
“which is to include more than 6,000 apartments.”
Also to be included are magic unicorns and leprechauns.
AP, Bonds for new Nets arena sell well
A developer's plan to move the New Jersey Nets to Brooklyn has gotten a boost from Wall Street.
Investors quickly bought up $511 million in tax-free bonds that went on sale Tuesday to pay for part of the much-delayed project.
Posted by eric at December 15, 2009 4:45 PM