Museum of Natural History Seeks Bond Buyers to Help Fund Rebound
(Bloomberg) -- The Covid-19 pandemic brought New York City’s American Museum of Natural History, home to 30 million prized artifacts, its first deficits in decades. The institution plans to tap the municipal bond market for an $85 million boost.
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Proceeds from the debt sale will help the 155-year-old museum lower its interest expenses and recover costs from building the Gilder Center, a major 21st Century addition. The offering by the Trust for Cultural Resources of The City of New York is expected to price on Oct. 17, according to investor roadshow documents.
The sprawling landmark on the Upper West Side of Manhattan welcomed 5 million visitors last year, second only to the city’s Metropolitan Museum of Art among US museums. But the pandemic had hit hard, forcing the venue’s closure between March and September 2020, and cutting average annual paid attendance by 37% that year.
The drop caused a shortfall of $18.8 million in 2020, according to bond documents, and annual deficits persisted for two more years despite a hiring freeze and job furloughs. Transfers from its endowment, which was valued at $736 million in March, made up the difference, according to a museum statement.
“Like many other cultural institutions, the museum has carried a deficit since the pandemic and we continue to work to eliminate it,” said a spokesperson for the organization in a statement. “The museum was very fortunate to have a strong opening of its Gilder Center, despite the fact that tourism recovery to New York City is taking longer than originally anticipated.”
The new wing, officially named the Richard Gilder Center for Science, Education and Innovation, opened in May 2023 and quickly became a cornerstone in a financial turnaround. The bond sale will cover $30 million of capital work completed this year and lower costs on $65 million of existing debt, according to the museum’s statement.
Gilder Center
The new addition, designed by an architectural team lead by Jeanne Gang, houses a butterfly conservatory, an insectarium, classrooms, laboratories, a library and large theater, among other gallery and storage spaces.
The center, plus the museum’s re-opening seven days a week, helped produce net operating revenue of $0.06 million in fiscal 2023. Admissions and membership fees make up the biggest slice of the museum’s revenue.
For 2024, a $2.3 million deficit — down from a forecast of $12.9 million — was funded by reserves.
A group of Moody’s Ratings analysts led by Debra Roane assigned the bonds a Aa3 rating, citing the museum’s “premier” position nationally and globally, its post-pandemic recovery and strong fundraising track record.
“These strengths are tempered by relatively high leverage, a complex physical plant requiring ongoing investment, and debt structure risk that includes potential demands on liquidity,” said Roane in the report.
The museum had $409 million in debt outstanding at the end of June 2023, Moody’s said. It has $43 million of other capital projects under way, according to the bond offering.
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