UNITED AIRLINES FLIGHT KITCHEN, NEWARD AIRPORT, NEW JERSEY
The challenge in this deal, once pre-leasing to United was achieved, was arranging take-out financing to replace the open ended construction loan. Although United Airlines credit was good when we began the project, by the time construction was completed and United took occupancy, the company’s financial prospects had dimmed considerably. Lenders were concerned that United would crash and burn, the lease would be worthless and this special purpose building would have little value as collateral. Joe Muscarelle was leading the development and he was quite concerned. We weren’t daunted. We rolled up our sleeves, and with the assistance of erudite airline financial analysts we put together a lengthy study of the airline industry, of United in particular, and of the effects of airline bankruptcies on key, special purpose, leased facilities at major airports. The conclusions of our study were that it was unlikely that United would go under and even if it did, the flight kitchen was essential to the airline’s operations and thus, that occupancy would be continued by a reorganized airline and the rent would be paid. We got the desired result. With our study ensconced in the Lincoln Savings Bank files, we got our take-out loan at 50 basis points over market, and the loan never went bad.