The Bank of America and the Durst Organization Inc. plan to refund $650 million of Liberty bonds sold to partially finance One Bryant Park, a $1.37 billion 57-story office tower in Midtown Manhattan, but so far don’t want to discuss details of the refinancing.
The two underwriters on the original sale, Bank of America subsidiary Banc of America Securities LLC and BNY Capital Markets Inc., offered no comment. Bond counsel Winston & Strawn LLP did not respond to requests for comment.
The bank’s unidentified point-person on the sale “wants to pass on commenting,” bank spokeswoman Louise Hennessy said in an e-mail.
The deal goes before the New York City Industrial Development Agency tomorrow for final authorization. IDA spokesman Jorge Montalvo said that deals typically go to market one to two months after receiving final board approval.
The original variable-rate Liberty bonds Series 2004A and 2004B, totaling $650 million, were sold on behalf of One Bryant Park LLC, a partnership between Durst and Bank of America. Durst, a New York City-based real estate developer, has a 50.01% interest in the partnership.
Most of the building’s 51 rentable stories have been pre-leased, Durst spokesman Jordan Barowitz said. The bank will occupy most of the 2.1 million square foot building, taking 1.6 million square feet on 37 floors that will include trading floors as well as space for a majority of the Charlotte, N.C.-based bank’s investment banking, trading, and asset management groups. The law firm Akin, Gump, Strauss, Hauer & Feld LLP will lease six floors, clothing designer Elie Tahari will lease one floor, Marathon Equity Corp. will lease two floors, and Durst will lease two floors, Barowitz said.
The outstanding bonds are backed by letters of credit and from proceeds of the investment of bond proceeds into a guaranteed investment contract.
Moody’s Investors Service and Standard & Poor’s rate the outstanding bonds based on several letters of credit. Moody’s assigns its Aa1 rating and Standard & Poor’s assigns its AA rating to the outstanding debt.
Fitch Ratings does not rate the outstanding bonds.
Analysts at Moody’s and Standard & Poor’s who rated the outstanding bonds said they had no information on the refunding.
Construction on the tower at West 42nd Street and 6th Avenue began in 2004 and the partners expect it will be ready for occupancy in the second quarter of next year. The building will have about 1.9 million square feet of office space, 48,000 square feet of retail space, a 15,000-square foot theater, and 65,000 square feet of underground storage.
The estimated cost of the building has risen by $80.9 million to $1.37 billion since the bonds were sold, according the official statement and IDA application. According to the application, the refunding was originally expected in March.
In addition to the bonds, Bank of America plans to loan the partnership $650 million through a taxable collateralized mortgage-backed security transaction next year to cover the remaining cost of the construction, according to the application. Bank of America also plans to spend $790 million on “tenant improvements and specialty work necessary to build its trading floor,” according to the application.
The project site, including the building, is owned by the Empire State Development Corp., which entered into a 99-year lease with One Bryant Park. One Bryant Park has the option to buy the property for $10 from ESDC 20 years after the completion of the project, according to the 2004 official statement.
The $8 billion federal Liberty bond program allocated $6.4 billion of tax-exempt private-activity bonds for commercial projects and $1.6 billion for residential projects following the terrorist attacks of Sept. 11, 2001.
