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Announcement:

Moody's maintains Queens Ballpark Company LLC, (NY)'s Ba1 and stable outlook

10 Jul 2015

Approximately $649 million of rated debt outstanding

New York, July 10, 2015 -- Moody's Investors Service maintains Queens Ballpark Company, LLC's Ba1 rating and stable outlook on the outstanding $512 million PILOT Revenue Bonds, Series 2006; the $78 million PILOT Revenue Bonds, Series 2009; the $53 million Installment Purchase Bonds, Series 2006; and the $7 million Lease Revenue Bonds, Series 2006, all issued by the New York City Industrial Development Agency's ("NYC IDA"). Queens Ballpark Company, LLC ("Ballpark") is the obligor for these bonds issued by the NYC IDA.

RATING RATIONALE

The Ba1 rating reflects the average cash flow predictability of Ballpark with just over half of its revenues derived from medium to long-term contracts with a stable underlying cost structure and a level debt service amortization schedule. The rating recognizes the strength of the Mets baseball franchise as one of the most valuable in the league and the Mets team non-relocation agreement. The rating also reflects Ballpark's underperformance to its initial revenue forecasts due to materially lower revenues as a result of lower attendance levels compared to the original forecast.

The Ba1 rating further incorporates Ballpark's weak liquidity profile given the lack of a strike reserve, minimal excess cash held at Ballpark level due to monthly distributions to the parent owner, and a weak Ambac surety policy funding the 2006 bonds' debt service reserve funds (DSRF). Of note, the DSRF for the 2006 PILOT bonds is gradually being cash funded on an annual basis and has a current balance of $21.4 million. The 2006 PILOT Bonds comprise the majority of annual debt service and nearly 80% of debt outstanding and it will take several years before its DSRF is fully cash funded to the required level.

OUTLOOK

The stable outlook reflects our expectation of continued stable financial performance with debt service coverage in the 1.7 to 1.9 times range for the next couple of years due to partially contracted cash flows and predictable costs.

What Could Change the Rating - Up

The rating could face upward pressure once all reserves are fully cash funded and annual financial performance improves with higher sustained annual debt service coverage ratios closer to the initial forecast.

What Could Change the Rating - Down

The rating could face downward pressure if performance weakens due to further declines in attendance or weaker contracted revenues resulting in debt service coverage falling below 1.5 times.

ISSUER PROFILE

Queens Ballpark Company, LLC is a special purpose entity created to lease, operate, maintain and manage the construction of Citi Field, the home stadium of the New York Mets. Queens Ballpark Company, LLC is an indirect wholly owned subsidiary of Sterling Mets, L.P. The New York City Industrial Development Authority acts as a conduit issuer for the outstanding bonds, owns the facilities, and has a 99-year ground lease with New York City for the land. The NYC IDA subleases Citi Field to Ballpark, who makes it available for the Mets use under the stadium use agreement. Ballpark is obligated to make Payments in Lieu of Taxes ("PILOTS") and rental payments to the NYC IDA in an amount no greater than what the property taxes would be on the property. Ballpark also purchases, on an installment basis, from the NYC IDA certain equipment, fixtures and severable tenant improvements to be used in conjunction with its use of the stadium. The NYC IDA has pledged the PILOTS, installment purchase payments and rental payments to the PILOT bonds, installment purchase revenue bonds and the lease revenue bonds, respectively. Ballpark transfers its semi-annual PILOT payment owed to NYC IDA to the trustee prior to debt service payments in January and July.

LEGAL SECURITY FEATURES

No cash flow distributions to the Mets or rebates due on contract revenues will be made unless Ballpark reasonably believes that sufficient funds will be available to meet both current and succeeding fiscal year obligations. There is a non-relocation agreement that extends beyond the final maturity date of the bonds, which states that the Mets must play substantially all of its home games at Citi Field.

PILOT Bonds

These bonds are secured by the annual payments in lieu of real estate taxes and assessments (PILOTs) paid to NYC IDA by Ballpark. Ballpark revenues used to pay these PILOTs are derived from the premium portion of standard luxury suite revenue (not including ticket sales portion of standard luxury suites), revenues from party suites, ticket sales associated with a total of approximately 10,635 club and premium seats in designated areas of the new stadium (retained seats), concessions and merchandise, parking, signage and advertising and naming rights. Ballpark retains the right to these revenues for the term of the stadium lease and the NYC IDA bonds.

Each annual obligation to make PILOTs is secured by a separate leasehold PILOT mortgage, imposing a lien on Ballpark's leasehold interest in the stadium. Failure to make a PILOT, if not cured, could trigger a foreclosure of Ballpark 's leasehold of the stadium by the NYC IDA. A debt service reserve fund (DSRF) requirement equal to 150% of maximum annual debt service is met by a surety provided by Ambac Assurance Corp. with respect to the Series 2006 PILOT Bonds and Assured Guaranty Corp. (A3,Negative) with respect to the Series 2009 PILOT Bonds. The 2006 DSRF is gradually being cash funded, as described above, given Ambac was downgraded below investment grade and its surety policy no longer qualifies as a funding source.

Lease Revenue Bond

The taxable lease revenue bonds are secured by minimum annual base rent payments of $500,000 to $1,000,000 due to the NYC IDA pursuant to the lease with Ballpark. Rent payments are made to the NYC IDA from Ballpark revenues. The rental payment obligation is secured by a leasehold rental mortgage, subordinate to the PILOT mortgages. A DSRF requirement equal to 150% of maximum annual debt service is met by a surety provided by Ambac with no requirement to replace with cash.

Installment Purchase Bonds

The taxable installment purchase bonds are secured by installment purchase payments due to the NYC IDA pursuant to an installment sale agreement for certain stadium equipment with Ballpark. These payments are also made from Ballpark revenues and are secured by a priority lien on the stadium equipment purchased with the bonds. A DSRF requirement equal to 150% of maximum annual debt service is met with a surety provided by Ambac with no requirement to replace with cash.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Generic Project Finance Methodology published in December 2010. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see Moody's Ratings Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the time horizon in which a credit rating action may be after a review or outlook action took place.

Please see ratings tab on the issuer page on www.moodys.com for the last rating action and the history of the rating. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com/disclosures for further information.

Please see the ratings disclosure page on www.moodys.com/disclosures for disclosures on significant Moody's shareholders and on certain relationships between Moody's, its shareholders and/or rated issuers.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

John Medina
Vice President - Senior Analyst
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Chee Mee Hu
MD - Project Finance
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's maintains Queens Ballpark Company LLC, (NY)'s Ba1 and stable outlook
No Related Data.
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