MTA to sell $1B in Hudson Yards bonds

Issuance is a first for the agency

TRD New York /
Sep.September 14, 2016 02:30 PM

The Metropolitan Transportation Authority is set to issue bonds backed by real estate for the first time in its history.

The state agency, which runs New York City’s subway system, plans to sell $1.06 billion worth of bonds Wednesday and use the revenue it gets from leasing the land beneath Hudson Yards to developers Related Companies and Oxford Properties Group to pay them off, according to Bloomberg.

Goldman Sachs is underwriting the bonds and proposed interest rates of 2.63 to 2.75 percent on bonds maturing in 2056, sources told the business publication. Monthly rent payments will cover the bonds.

According to Scott Richman of Whitehaven Asset Management, the bonds may simply draw interest because the MTA is a new player on the bond market and investors are keen to diversify.

“For the mutual funds, this entity will count as a different name and for better or worse a different name is actually worth a lot in the municipal market,” he said. “So even though it might have a similar credit backing to a much larger issuer, that will create demand within the space.”

A recent report found that Hudson Yards will contribute $1.78 billion to the MTA’s coffers during construction through ground lease payments and air rights purchases, and another $89 million annually after completion.

Last month, The Real Deal went behind the scenes to break down how Related and Oxford are financing the megaproject, which includes $14 billion in debt and equity to date.

Scheduled for completion in 2029, Hudson Yards will include nine apartment buildings, three office buildings and a million square feet of retail space. 15 Hudson Yards, the first residential building in the complex, launches sales this week.[Bloomberg]Konrad Putzier


Related Articles

(Image by Wolfgang & Hite via Dezeen)

Hudson Yards megadevelopment inspires a new line of sex toys

15 Hudson Yards (Credit: Related-Oxford, iStock)

First he sold a plot of land to Hudson Yards’ developers. Now he owns 7 luxury condos there

70 Pine Street and Goldman Sachs chairman Lloyd Blankfein (Credit: Wikipedia and Getty Images)

Goldman Sachs refis Art Deco apartment conversion at 70 Pine with $386M loan

The Plaza Hotel in 1975 and models walking the runway during New York Fashion Week September 2019 (Credit: Getty Images)

Fashion Week struts its stuff at these iconic NYC locations

M&T CEO René Jones and Brookfield managing partner Ben Brown with 5 Manhattan West (Credit: M&T, Brookfield, and Wikipedia)

Brookfield lands $184M refinancing for Manhattan West retail

247 Metropolitan Avenue in Williamsburg (Credit: The Pod Hotel)

Goldman Sachs provides $90M loan to refinance hotel in Williamsburg

From left: Prabal Gurung, Dana Lorenz and Stephen Ross (Credit: Getty Images)

Stephen Ross backlash hits Hudson Yards

Banks see uptick in mortgages, but remain wary ahead of potential Fed interest rate cut