University Selling Bonds for Atlantic City Campus
New Jersey's Stockton University is holding a bond sale Thursday to raise proceeds for its planned new $178 million Atlantic City campus.
The Atlantic County Improvement Authority is slated to issue $123 million in bonds on behalf of the public college based in Galloway Township, N.J. to fund construction of the new satellite campus it plans to open in 2018 for about 1,000 students. The project will feature a 56,000-square-foot academic building, a 217,000-square-foot residential housing for more than 500 students and 866 parking spaces.
Thursday's borrowing features two negotiated transactions including $74.6 million of series 2016a general obligation lease revenue bonds backed by university rent revenues. An additional $48.4 million of series 2016b county guaranteed revenue bonds will also be sold that are supported by economic tax credits. Both deals are insured by Assured Guaranty.
Citi is lead underwriter on the deals with NW Financial working as financial advisor and Archer & Greiner as bond counsel. The 2016a bonds were assigned negative outlooks with ratings of Baa1 by Moody's Investors Service and A by Fitch Ratings. The series 2016b bonds were also given negative outlooks with a double-A rating by S&P Global Ratings and Aa2 by Moody's.
Stockton previously purchased the former Showboat Casino Hotel property for $18 million in December 2014 to open a satellite campus in Atlantic City before encountering legal hurdles from land-use restrictions. The university then pursued land that formerly housed Atlantic City High School as part of a public-private partnership with Atlantic City Development Corp.
Moody's downgraded Stockton's credit rating one notch to A3 with a negative outlook in May 2005 citing concerns about future financial support from New Jersey.
Stockton's long-term investment in Atlantic City arrives as the city faces serious short-term financial challenges with the possibility of a state takeover later this fall if it can't craft an acceptable five-year recovery plan. The distressed gambling hub, which suffered four casino closures in 2014, violated the terms of a $73 million bridge loan from the state on Sept. 15 after failing to dissolve the Atlantic Municipal Utilities Authority or using it as collateral in the case of a default. The city is burdened with $240 million in bond debt and owes $170 million in tax refunds to the Borgata Casino Hotel & Spa.