The New York City Capital Resource Corp. yesterday approved a $17 million recovery zone facility bond deal to partially finance the construction of a medical office building in Queens.
Fleet Financial Group Inc., a five-year-old real estate development and management firm, plans to use the bond proceeds to pay part of the costs to build and equip a $42.3 million, 80,000-square-foot facility in Flushing to be called North Queens Medical Center. The city was allocated $121.7 million of the tax-exempt private-activity bonds under the American Recovery and Reinvestment Act.
The CRC also gave preliminary approval yesterday of $19.7 million of tax-exempt bonds on behalf of ESmith Legacy Harlem LLC to partially finance a hotel at West 125th Street and Lenox Avenue, the last project to receive an allocation.
The North Queens Medical Center bonds, which will be privately placed by Loop Capital Markets LLC, will be the first to be sold by the issuer under the program, and they must be issued before the end of the year. CRC chairman Seth Pinsky on Friday said the deals haven’t priced due to difficult market conditions.
The medical center bonds will be sold at interest rates and with a structure that one market participant said reflects substantial risk. The bonds will be in an interest-only mode for the first 10 years and will be callable after five years at 103. They will have two maturities: $5.4 million with a 20 year maturity and a 7.5% interest rate, and $11.6 million with a 30 year maturity 8% interest rate. Those rates are 360 basis points and 400 basis points above the Municipal Market Data triple-A curves for the same maturities on Monday.
The CRC will also issue $12.3 million of taxable bonds for the project, primarily to refinance an existing mortgage loan from HSBC bank. Those bonds will have a 10-year maturity and an 8% interest rate.
Also yesterday, the New York City Industrial Development Agency, which operates alongside the CRC, announced it would meet Friday with a task force created by Gov. David Paterson to make recommendations on how to implement certain provisions of the Public Authorities Reform Act, which became law last year. Lawyer Ira Millstein heads the task force. The meeting will closed to the public, Pinsky said.