The Museum of Modern Art isn’t having trouble finding the money for its $450 million renovation and expansion.
The midtown Manhattan museum has already raised $650 million for its plan to add three floors of new galleries, thanks to pledges from donors including entertainment mogul David Geffen and hedge-fund manager Kenneth Griffin. On Wednesday, it secured even more by selling $281 million of tax-exempt bonds through a New York agency to raise money for the project and refinance debt as borrowing costs drop to the lowest on record.
"Their donor support puts them in a position that few museums enjoy," said Moody’s Investors Service analyst Dennis Gephardt, who rates the bonds Aa2, the third highest rank, with a stable outlook. "They’re stronger than typical."
MOMA is embarking on its second overhaul in as many decades to accommodate the more than 3 million visitors it receives each year. The project is comprised of two parts -- $50 million of renovations to the current space at 11 West 53rd Street, as well as an expansion at neighboring 53 West 53rd Street.
Renovations have already begun at the existing midtown Manhattan museum. It plans next year to start the $400 million expansion, which will give it three floors of an 82-story skyscraper full of luxury condominiums.
"The goals of the expansion are to create more space for art from our collection and to provide a more welcoming experience," said Kim Mitchell, a spokeswoman for the museum. "We are seeking to grow our endowment through private fundraising to ensure fiscal stability upon opening of the new building and beyond."
The 630,000-square-foot museum, whose size was doubled in a $858 million expansion in 2004, was designed to accommodate about 2 million visitors per year. But MoMA’s annual attendance now exceeds 3 million between its Manhattan and Queens locations. To help cope with lower revenue during the renovations, the museum granted early retirement buyouts to 42 of its employees.
Moma’s bonds, issued through the Trust for the Cultural Resources of the City of New York, were priced for yields ranging from 1.26 percent for those due in 2023 to 2.14 percent for securities maturing in 2031. The deal, underwritten by Goldman Sachs Group Inc., raised about $100 million for the project, with the rest being used to refinance higher-cost debt.
"While their balance sheet is strong, they are willing to make cuts on the expenditures side when the budget is getting tight," said Howard Cure, head of municipal research in New York at Evercore Wealth Management, which oversees $6.3 billion of state and local debt. "They have some discipline about not necessarily dipping into the balance sheet to subsidize operations even though they could afford to do that."