|Redemption planned for Oct. 6|
That $90 million total would have gone halfway to paying for a tower initially slated to cost $183 million (including $117 million for construction).
|Sept. 28 construction photo via Tectonic|
we can provide no assurance that our lender will agree to extend the forbearance agreement. Depending on the outcome of our lender discussions, we may be required to repay the current outstanding balance of $45,000,000 currently secured by, amongst other things, $37,500,000 of restricted bond proceeds included in restricted cash, $10,000,000 of cash in escrow and an equity letter of credit of $9,300,000. In the meantime, we continue to fund construction costs with equity.
With a relatively short period of time remaining to complete our work in the factory and field, we made the decision to use equity to continue construction and will evaluate procuring new financing at a later date.
Forgoing the unissued bonds gives the NYC HDC an opportunity to use the unused allocation for other projects to create additional affordable housing in the City. The affordable program at 461 Dean Street will remain the same.
|NYC HDC 2014 audit|
One scenario in which loans are paid off early might be when interest rates plunge, so a borrower could refinance at a lower interest rate.
|Fees for the loan, via NYC HDC|
Construction did resume. However, Sanchez told me, "Since the borrower has decided to pay off the construction loan, HDC will not be issuing the second tranche of bonds and will redeem the bonds on the first tranche."
As noted last February, Forest City in 2014 recorded an impairment charge of $146,300,000--a loss of value--regarding the building in 2014. This past August, it stated:
As of June 30, 2015, we have $74,182,000 capitalized on the Consolidated Balance Sheet related to B2 BKLYN. Based on the most current information available, total project costs are estimated to be $162,100,000, after giving effect to an impairment charge recorded in 2014.
Impairment charges can be murky. "There’s a huge body of financial reporting requirements around when you take an impairment, when you reverse it, and so on," Smith commented. "They are a mixture of science, art, and necromancy."
The redemption notice