The New York City Trust for Cultural Resources is planning to sell up to $150 million of tax-exempt revenue bonds on behalf of the Metropolitan Museum of Art by the end of the year.
The bonds will be used to finance or refinance an ongoing capital reconstruction and renovation project that is creating approximately 80,000 square feet of new gallery space, as well as buy new furnishings and equipment.
Morgan Stanley will be the underwriter. Orrick, Herrington & Sutcliffe LLP is counsel for the issuer.
The nonprofit museum received an upgrade from Standard & Poor's last week to AAA/A-1-plus with a stable outlook from AA-plus/A-1-plus, reflecting an endowment that has grown significantly since an upgrade in 1995 and is expected to keep growing, according to the rating report.
The upgrade affects about $33.4 million in rated debt. Significant capital improvements and a strong liquidity also contributed to the higher rating, the report said.
Moody's Investors Service rates the museum's outstanding debt Aa1, while Fitch Ratings does not rate the credit. The bonds will not be insured.
The museum has more than $2.4 billion of cash and investments, with a diverse stock portfolio and about $70 million of debt. More than four million visitors gaze at the institution's world-class art collection each year. The Standard & Poor's report also cited an impressive board with a record of giving and a professional management team.
The nonprofit organization's gross revenue was $283 million in fiscal 2006 and its gross expenses were $285 million. The museum expects to break even in fiscal 2007. Income comes from several sources, including $24.7 million from the city, $47.8 million from gifts and grants, and $21.9 million from admissions.
