JFK Airport Terminal 6-7 Redevelopment Project

RBC Capital Markets, LLC (RBCCM) served as Coordinating Lead Arranger, Initial Purchaser, and Swap Counterparty for the JFK Airport Terminal 6-7 Redevelopment Project.

Published April 3, 2023 | 4 min read

Transaction Summary

On November 17, 2022, RBCCM acted as Coordinating Lead Arranger (CLA) for the $3.444 billion of Senior Secured Credit Facilities (Senior Credit Facilities) as well as Initial Purchaser and RBC acted as Swap Counterparty for the New York Transportation Development Corporation’s (TDC) $435,000,000 Special Facilities Bonds, Senior Series 2022A (Tax-Exempt) (AMT) (JFK Airport Terminal 6-7 Redevelopment Project) (the “Series 2022A Bonds”).  The proceeds of the Senior Secured Credit Facilities, which include the Series 2022A Bonds, are being loaned to JFK Millennium Partners, LLC (“JMP” or the “Developer”), which was formed to undertake the design, construction, financing, operation, and maintenance of the New Terminal 6 Facilities at the JFK Airport (the “Project”) through a public-private partnership (P3) with the Port Authority of New York and New Jersey (PANYNJ).  The Project consists of the construction and operation of new terminal facilities at John F. Kennedy International Airport (“JFK” or the “Airport”) on the vacant site of the former Terminal 6 facilities, closed approximately 15 years ago, and redevelop the current Terminal 7 into a single, integrated new Terminal 6.

Summary of Terms

Size and Offering: $3,444,000,000 Senior Secured Credit Facilities, including $435,000,000 Special Facilities Bonds, Senior Series 2022A (Tax-Exempt) (AMT) (JFK Airport Terminal 6-7 Redevelopment Project)
Issuer: New York Transportation Development Corporation (“TDC”)
Public Sponsor: Port Authority of New York and New Jersey
Developer: JFK Millennium Partners, LLC
Equity Sponsors of the Developer: Vantage Airport Group (45%), American Triple I (30%), RXR Realty (20%), JetBlue (5%)
Security: Revenues from new Terminal 6, primarily consisting of (i) airline passenger fees, (ii) rental income, and, (iii) terminal concession revenue (retail, food, beverage)
Credit Ratings: Moody’s: Baa3
Closing Date: November 17, 2022
Purpose: Terminal construction / redevelopment costs, contributions to PANYNJ works, reserves, interest during construction
Tax Status of the Series 2022A Bonds: Tax-exempt, subject to the Alternative Minimum Tax (“AMT”)
Structure: Flexible Drawdown Bond (“FDB”) Directly Purchased by RBCCM
Final Maturity: 7-years (November 17, 2029)
RBCCM Role: Coordinating Lead Arranger, Initial Purchaser, and intermediary with RBC as Interest Rate Swap Counterparty

Borrower, Issuer and Equity Sponsors Overview

The Senior Credit Facilities were issued by the New York TDC on behalf of JMP, acting at the direction of the Equity Sponsors.  The Equity Sponsors consist of: Vantage Airport Group, an industry-leading developer, investor, and manager of airports and terminals around the globe, known for projects including the new Terminal B at LaGuardia Airport; American Triple I, a New York-based investor, owner, developer, and manager of infrastructure assets and infrastructure-focused companies; RXR Realty, a vertically integrated private real estate company with expertise in investment management, property management, development, design, construction, leasing, and financing; and, JetBlue Airways, the seventh largest airline in North America by passengers carried.

Plan of Finance

The Project’s financing will include $3.444 billion Senior Secured Credit Facilities and $1.3 billion of equity contributed by the Sponsors.  The Senior Secured Credit Facilities include $435 million Series 2022A Bonds and $3 billion taxable bank term loans, including a $2.55 billion delayed draw term loan.  The Series 2022A Bonds have been directly purchased by RBC and the $3 billion taxable bank term loans have been syndicated by the other six CLAs.  The Series 2022A Bonds are structured as a FDB direct purchase indexed to SIFMA.  The Senior Credit Facilities are expected to be refinanced from the proceeds of long-term municipal bonds in various bond sales over the course of the 5-year construction period and up to 2 years post construction completion.  To hedge the interest rate risk, the senior secured lenders, including RBC, and JMP entered into fixed payor interest rate swaps to hedge variable rate interest rate risk during construction as well as long-term refinancing interest rate risk.

Pricing Benefit of the RBC Structure

As the only CLA active in the municipal market, RBCCM was able to provide the Sponsors with a lower cost financing alternative than the taxable bank term loans being provided by the other CLAs.  RBCCM’s tax-exempt direct purchase structure provided a revolving delayed draw alternative to a typical bank revolver with substantially the same terms, but at a lower cost of funds given the beneficial cost of tax-exempt funding.  RBC direct purchase facilities are funded through a tax-exempt tender option bond program administered by RBCCM’s Fixed Income and Currencies Municipal Products’ short-term desk and is backed by an RBC letter of credit.

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