N.Y.C.'s Whitney Museum Plans $125M for New Spot

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The Whitney Museum of American Art plans to borrow $125 million of tax-exempt bonds in mid-July to help finance construction of its new location in Manhattan’s meatpacking district.

Morgan Stanley will serve as book-runner for the transaction.

This will be the first-ever municipal debt borrowing for the museum, according to Brittanie Schmieder, Whitney’s treasury director.

The museum, founded in 1930, is looking to raise funds in the capital markets to help with immediate costs while it moves ahead with its $720 million capital campaign.

“We’re issuing tax-exempt bonds in order to bridge the timing of capital campaign receipts and city funding,” Schmieder said.

Orrick, Herrington & Sutcliffe LLP is bond counsel for the Trust for the Cultural Resources of the City of New York, a conduit issuer for cultural institutions. There is no outside financial adviser. Nixon Peabody LLP is counsel for the Whitney.

The potential structure for the $125 million bond deal includes a 10-year bullet maturity and a longer piece that amortizes out to 2031, Schmieder said.

“There’s a desire on our part to lock in our costs to fund,” she said. “What we’re contemplating is a fixed-rate bond deal and long-term rates are fairly attractive.”

The trust is set to vote on the borrowing at a June 28 board meeting, said Donald Elliott, secretary of the trust. Whitney’s more than 19,000 works of 20th century and contemporary U.S. art have outgrown its Madison Avenue location in Manhattan’s Upper East Side and will move downtown.

Officials peg costs for the new building at $380 million, according to Schmieder. The overall $720 million capital campaign includes boosting the museum’s endowment fund by $230 million, fundraising costs, marketing expenses, and other spending needs.

New York City Mayor Michael Bloomberg and city and museum officials last month held a groundbreaking ceremony at the museum’s future home in Manhattan’s meatpacking district, just south of the Chelsea neighborhood.

The city will provide $55 million of capital investment towards the project. It sold the city-owned 36,000-square-foot site to the Whitney for $27 million.

Officials anticipate the new location will open in 2015. The $380 million development, designed by architect Renzo Piano, includes a nine-floor, 200,000-square-foot building that will double Whitney’s current gallery space. The new facility will offer a 170-seat theatre, state-of-the-art classrooms, an art conservation laboratory, outdoor space, dining options, and a retail shop.

“The new Whitney Museum will be New York City’s newest world-class cultural destination in one of the city’s most dynamic and distinctive locations,” Bloomberg said in a statement at the groundbreaking ceremony.

Museum officials do not plan on selling Whitney’s current venue. Once the museum moves to its new home, the Metropolitan Museum of Art will use the Madison Avenue location for exhibits and lectures.

The Whitney reported net assets of $299.7 million, according to its 2009 IRS form 990, posted on GuideStar.org. Total assets in 2009 were $311.6 million, compared to liabilities of $11.9 million.

The museum’s expenses surpass its revenue. It collected $33.8 million of revenue in 2009 and spent $42.1 million, for a deficit of $8.2 million. The museum had 372,000 visitors in 2009.

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