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MassDevelopment In The News
MassDevelopment Selling $125 Million in Two Housing Deals
December 15, 2006: The Bond Buyer, by Michelle Kaske
The Massachusetts Development Finance Agency will sell $125 million of new-money debt next week on behalf of Clarendon Street Associates and AvalonBay Communities to help finance 665 new housing units in and around Boston, according to MassDevelopment documents.
Goldman, Sachs & Co. will price $80 million of variable-rate bonds Tuesday or Wednesday for the Clarendon project. Nixon Peabody LLP is bond counsel. The bonds are backed by a letter of credit from Bayerische Landesbank. No interest rate swaps tied to the transaction are planned at this time.
Moody’s Investors Service’s enhanced rating for the sale is Aa2. It does not have an underlying rating. Fitch Ratings and Standard & Poor’s do not rate the credit.
The sale will offer term bonds with a final maturity in 2040. Half of the deal is tax-exempt and half is taxable. The use of a taxable component is due to the authority’s cap on tax-exempt borrowing for housing projects, said Tony Fracasso, senior vice president for housing finance.
MassDevelopment’s limit on tax-exempt housing bonds is roughly $500 million, according to Adam Bickelman, director of communications.
New-York City-based real estate developer Related Cos. heads the development team for the project.
The transaction will create financing for a mixed-use development that will offer 178 apartments and 107 condominiums in downtown Boston. Of the rental housing, 20%, or 36 units, will be rented to households earning up to 50% of the area median income, according to MassDevelopment documents.
The retail component of the plan consists of 15,000 square feet of commercial space on the ground floor of the building.
The smaller $45 million sale for AvalonBay Communities will price Wednesday and will also offer a variable-rate term bonds with a final maturity in 2040. No swap is planned at this time.
RBC Capital Markets is underwriter for the deal. Nixon Peabody LLP is bond counsel. SunTrust Bank will supply a letter of credit.
The development project, called Avalon Action, is located 28 miles west of Boston in the town of Acton. The deal will help finance 380 apartments, 76 of which will be reserved for households with incomes equal to or less than 50% of the area median income.
Standard & Poor’s does not rate the deal. Moody’s and Fitch could not supply rating information by press time.
This is the first time that both Clarendon and AvalonBay Communities are issuing debt through MassDevelopment, Fracasso said.
Another development in the works is for Brandeis University. The authority yesterday authorized $60 million of bond sales for the school with Lehman Brothers as underwriter. The deal will sell in January, according to Bickelman.
© Copyright 2006 The Bond Buyer.
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