KBRA Affirms A- Rating for MTA Hudson Rail Yards Trust Obligations; Outlook is Stable

4 Sep 2024 | New York

KBRA affirms the long-term rating of A- for the Metropolitan Transportation Authority, NY Hudson Rail Yards Trust Obligations. The Outlook is Stable.

The rating was affirmed because of the following key credit considerations:

Credit Positives

High profile development project with substantial underlying property value resulting in low LTV ratios based on KBRA’s stress scenarios.
The Obligations’ flexible amortization schedule mitigates against the risk of potential delays in Project development.
The MTA’s obligation to replenish the Interest Reserve Fund helps offset potential delays in the exercise of cure rights and the disposition of property following a ground lease payment default.

Credit Challenges

The payment of ground rent is subject to ongoing tenant credit risk, although such risk is partially mitigated as ground rent payments are made by Related-Oxford rather than individual tenants.
The ultimate value of land and improvements in the development areas are subject to market volatility. Declines in valuation of developed parcels could impact a tenant’s willingness to make ground rent payments.

For Upgrade

Completion of the WRY platform and accelerated progress in development of the WRY parcels.

For Downgrade

Significant delays in construction or failure to complete the WRY platform foundation and other developments on the WRY site.
Deterioration in regional or national property values, contributing to significant curtailment of development activity or a decline in the value of developments in the ERY/WRY.
Significant deterioration of the MTA’s credit quality.

To access rating and relevant documents, click here.