Fitch Ratings revised the Battery Park City Authority’s outlook to negative from stable last week, citing the potential volatility of the commercial and residential real estate market.
The recession “has had an increasingly negative impact on residential and commercial real estate values, and the contraction of the financial services industry in particular, which may have an especially negative impact on the demand for office and residential real estate in downtown Manhattan, including Battery Park City,” a Fitch ratings report said.
Fitch affirmed its AAA rating for the senior debt and its AA rating of the junior debt.
The outlook change affects $100 million of tax-exempt bonds to be marketed next month, $392 million of outstanding senior debt and $632 million of outstanding junior debt.
The authority owns and manages a 92-acre complex in lower Manhattan consisting of office space, hotels and housing. Its debt is secured by payments in lieu of taxes and pledged rental revenue.
About 55% of the pledged revenue comes from its office properties while residential properties generate about 40% and hotels 5%, the report said.
Most of that revenue, 76%, comes from PILOTS, the report said.