CHICAGO – One of the only intermodal freight facilities to take advantage of a 12-year-old federal private activity bond program is readying its fourth round of financing.
The CenterPoint Joliet Terminal Railroad LLC in Illinois plans to privately place up to $150 million of unrated Surface Freight Transfer Facilities Revenue Bonds as soon as this spring.
The proceeds would "finance the acquisition of land, and construction and equipping of various capital improvements" at the CenterPoint Intermodal Center, according to Illinois Finance Authority documents.
4,000-acre campus in Joliet houses distribution centers, container storage yards, and export facilities. It serves to smooth rail-to-truck and truck-to-rail transfers of goods and services and is commonly referred to as an "inland port."
The lFA, which is the conduit issuer, approved the transaction at its March meeting.
The bonds will be privately placed by SunTrust Robinson Humphrey to a syndicate of banks led by SunTrust under a bank direct purchase structure. The bonds will carry interest rates ranging from 2% to 5% and with an anticipated final maturity of 2043.
The private activity bond financing is CenterPoint's fourth, following a $100 million private placement last year which came after a $75 million issue of surface freight facilities tax-exempt revenue bonds in 2012 and its first sale in 2010 for $150 million.
CenterPoint could seek another $682 million of borrowing through the IFA, according to IFA documents, based on total project costs of $1.26 billion as the facility is built out over the next five to 10 years.
The project has received an additional allocation of $300 million under the U.S. Department of Transportation's freight transfer facility revenue bond program established in 2005 in the SAFETEA-LU federal transportation authorization. It authorized an initial $15 billion of PABs for qualified projects.
The program seeks to promote private investment in highway, bridge and intermodal freight-transfer facility projects of regional or national importance with tax-exempt PABs. Such projects aren't subject to state PAB volume caps.
"According to CenterPoint, improved productivity/logistics in the Chicago area is important since approximately 60% of freight traveling inland from the coasts either stops in Chicago, or travels through Chicago to other markets," IFA documents say. "Although it takes only two days for freight to be shipped from the coasts, it can take four days for this rail traffic to move through the city of Chicago."
The facility appears to be only intermodal facility financed to date under the program although another does have an allocation.
Perkins Coie LLP is bond counsel. The bank syndicate led by SunTrust includes Bank of America, BB&T, PNC Bank, Regions Bank, and US Bank. They currently provide credit lines to CenterPoint. Bank counsel is Dentons.
As of January 23, nearly $6.6 billion in PABs have been issued to date for 17 projects including CenterPoint's first three financings, according to the Federal Highway Administration. Approved PAB allocations total approximately $4.3 billion to support an additional eight projects. The latter figure includes CenterPoint's additional $300 million allocation.
Projects also must receive Title 23 Highway Funds or Title 49 railroad grant funds. The IFA said CenterPoint has a commitment from Title 23 satisfying both US DOT requirements to qualify for the tax-exempt issuance for the project. Those funds have improved local bridges and highways that serve the project.
CenterPoint LLC is a real estate development company set up in 2007 to build and manage the facility. The borrower is primarily owned by CalEast Global Logistics LLC, a leading investor in logistics warehouse and related real estate; it's a joint venture of the California Public Employees Retirement System and GI Partners.
The IFA board also approved an up to $55 million issue on behalf of BHF Chicago Housing Group B LLC, to finance the acquisition, rehabilitation, and equipping of 45 multifamily affordable residential rental properties with more than 400 units.
The bonds are expected to be sold in two tranches, with the senior one carrying at least an A-minus rating from S&P Global Ratings and a subordinate series carry a BBB-plus rating. Greenberg Traurig LLP is bond counsel and Stifel Nicolaus & Co. Inc. is underwriter.
The IFA board also approved an up to $100 million new money and refunding issue for the Franciscan Communities Inc. to finance the acquisition and improvements of senior living facilities and refund debt. About half is being publicly offered and the other half privately placed.
The IFA also is launching the procurement process for financial teams to work on its next round of state revolving fund borrowing. The IFA closed last year on a $500 million issue.