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CIM Group Taps $556M in Muni Bonds for $4.2B Atlanta Megaproject

CIM Group is driving a $4.2B overhaul of Atlanta’s Gulch, converting 50 acres of old rail yards into the mixed-use Centennial Yards, partly funded by municipal bonds.

CIM Group Taps $556M in Muni Bonds for $4.2B Atlanta Megaproject

CIM Group is driving a $4.2B overhaul of Atlanta's Gulch, converting 50 acres of old rail yards into the mixed-use Centennial Yards, partly funded by municipal bonds.

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Good morning. A $4.2 billion transformation of Atlanta's Gulch area into a vibrant mixed-use development is gaining momentum as CIM Group taps into the municipal bond market for financing.

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municipal-bond market

CIM Group Taps $556M in Muni Bonds for $4.2B Atlanta Megaproject

CIM Group Taps $556M in Muni Bonds for $4.2B Atlanta Megaproject

A rendering of Centennial Yards.Source: Centennial Yards

CIM Group is leading a $4.2B redevelopment of Atlanta's Gulch, turning 50 acres of old rail yards into Centennial Yards, a mixed-use district funded partly by municipal bonds.

Megadevelopment: JPMorgan Chase is underwriting $556 million in municipal bonds to support the Centennial Yards project, which includes over 2,600 apartments, 2,900 hotel rooms, retail spaces, and a data center. This project is expected to redefine downtown Atlanta, turning what was once a parking lot into a bustling urban hub.

High-risk, high-reward: The two municipal debt offerings are unrated and targeted at qualified institutional buyers, reflecting their high-risk nature. The $356 million portion is tied to sales taxes in the development area and starts accruing interest in 2028. A separate $200 million bond issue will cover project costs and reimburse property taxes.

Big ambitions: Located near key landmarks like the Mercedes-Benz Stadium, Centennial Yards aims to be a pedestrian-friendly district with 16 blocks of residential, retail, and entertainment space. The project is on a tight timeline, aiming to complete the entertainment district before the 2026 FIFA World Cup, which will be held nearby.

➥ THE TAKEAWAY

Strong demand: High-yield munis are hot in 2024, delivering 6% returns and outpacing investment-grade munis by 5 points. David Mann of Manulife says the success of bonds like those for Centennial Yards hinges on the completion of key projects like hotels and apartments. CIM's similar Miami Worldcenter bonds, due in 2041, tightened from a 5.25% yield to about 4.8%, showing strong demand for riskier debt.

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✍️ Editor’s Picks

  • Renters reign: According to Realtor.com, renting is now financially more advantageous than buying in all 50 major US metros, with a 61.3% premium on average.

  • Rent reductions: So far in 2024, all apartment unit sizes are seeing their first annual decline in asking rent since 2020, with the national median at $1,647.

  • Industry evolution: Brokerages are facing industry-altering changes as NAR is set to introduce its new rules on August 17th, impacting buyer agreements and commission structures nationwide.

  • Profitable healthcare: UCHealth purchased 11 Colorado healthcare facilities from Medical Properties Trust (MPW) for $86M, initially funded at $64M.

  • Listing rivalries: Homes.com now claims the No. 2 spot among major US listing platforms, with 148M monthly visitors, trailing Zillow's (ZW) 230M monthly users.

  • Driving decisions: The NYC City Council approved a bold Bronx rezoning plan, aiming for 7K units, including 1.7K affordable ones, with parking mandates cutting out 582 planned units.

🏘️ MULTIFAMILY

  • Unlocking Class A: In a recent webinar, Ashcroft Capital’s Travis Watts broke down a multifamily value-add investment that avoids a major renovation scope but still captures premium rents. 

  • Teacher struggle: Miami is the toughest city in the country for teachers to afford housing. On average, they can only afford 0.2% of apartments nearby.

  • Multifamily moves: Reap Capital takes Dallas by storm with a trio of foreclosure acquisitions direct from lenders and grows their DFW portfolio to 1,616 units. (sponsored)

  • Oceanfront luxury: Multiplan's Ocean House in Surfside, FL, will have 25 units starting at $5M, penthouses ranging from $50M–$60M, and a total sellout estimate of $300M+.

  • Affordable mandate: Costa Mesa is mandating 4–10% affordable housing units in developments of 50+ apartments, or developers can pay an in-lieu fee of $10 PSF.

  • Taller redwoods: R&M Properties is planning a 310-foot, 28-story senior highrise in Redwood City, which will be the second tallest in San Mateo County.

🏭 Industrial

  • Innovation sold: In a $81.5M deal, the Silicon Valley Innovation Hub in San Jose was fully leased to Merck (MRK) and sold to Klein Investments.

  • Industrial innovation: MDH Partners acquired a 249 KSF industrial property in Buckeye, AZ, for $51M, with tenants including the City of Buckeye.

  • Major expansion: EQT Exeter spent $151M in cash on 822.4 KSF of industrial properties in Phoenix, averaging $184 PSF.

  • Delightful data: JK Land Holdings bought a Virginia site for $60M and plans to build a 360 KSF data center with office and industrial space.

🏬 RETAIL

  • Retail reinvention: Lincoln Property Co. has invested in Centennial, a national retail real estate owner, to accelerate national expansion.

  • Maxxed out: The T.J. Maxx-anchored 1 North State Street shopping center in Chicago has lost 80% of its value and is heading to foreclosure auction.

🏢 OFFICE

  • Scientific seaport: Eli Lilly opened the Lilly Seaport Innovation Center in Boston with 346 KSF for RNA/DNA therapies and diabetes research.

  • Lending joint venture: Deutsche Bank (DB) and Wells Fargo (WFC) provided a $75M fixed-rate loan with 6.62% interest for a Culver City office-retail center.

  • Boston bungle: Boston-based landlord Beacon Capital Partners may default on a $370M loan for Chicago's 330 North Wabash skyscraper.

🏨 HOSPITALITY

  • Discount Hollywood: MetLife (MET) and Loews (L) listed the Loews Hollywood Hotel for sale at $125M, $40M lower than its 2012 purchase price.

📈 CHART OF THE DAY

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