Silverstein Properties Inc. plans to issue $900 million of fixed-rate municipal bonds next week to refinance debt issued to build a 63-story tower at the World Trade Center site, said Elizabeth Mitchell, a spokeswoman for the Empire State Development Corp.
Silverstein is issuing the bonds through the state’s Liberty Development Corp., a subsidiary of Empire. Goldman Sachs Group Inc. (GS) will lead a group of investment banks in selling the bonds, which were issued in 2009 as part of the Liberty Bond program. The program was part of a U.S. economic package to help New York City recover from the Sept. 11 terrorist attacks by providing developers access to cheaper tax-exempt financing.
Silverstein has postponed the bond issue for the 1.8 million-square-foot (167,220-square-meter) Tower 4 since December as concerns about state and local government finances and a flood of issuance drove 30-year interest rates on municipal bonds to two-year highs. Yields on top-rated 30-year municipal bonds reached 5.28 percent in the week of Jan. 14, according to Municipal Market Advisors. They declined to 5.11 percent April 4.
Silverstein also plans to issue as much as $375 million of floating-rate bonds as part of the deal, according to Bud Perrone, a spokesman for Silverstein. The Securities Industry and Financial Markets Association seven-day swap index, which is used to measure top-grade, floating-rate bonds, was 0.25 percent on March 30.
“We are expecting to achieve the rates that we would have achieved just before the market turned up, so I think we’ll end up pleased with the net results,” company President Larry Silverstein said in an interview after announcing a new lease for law firm WilmerHale at 7 World Trade Center. He didn’t offer specifics.
The Tower 4 bonds are backed by payments from the Port Authority of New York and New Jersey and fixed rents from a 15- year lease with New York City. In December, Standard & Poor’s rated the debt AA-, its fourth-highest investment grade rating. The new debt for Tower 4 will mature in 2031, 2041 and 2047.
The World Trade Center redevelopment plan includes five office towers, with the 1,776-foot One World Trade Center, formerly called the Freedom Tower. The project incorporates a Sept. 11 memorial, a transit center and a museum.
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