Georgia To Build $440 Million Convention Center Hotel

The authority that owns Atlanta’s George L. Smith II Georgia World Congress Center sold $440 million in municipal revenue bonds through a series of transactions last week, according to regulatory filings.

The funding is for a new 975-room Hilton hotel next to the Mercedes Benz domed stadium. According to a presentation on the convention authority’s website, the hotel is slated to have 75,000 square feet of event space and parking for 490 cars. The high-rise structure will also have a glass exterior with extensive cosmetic lighting.

Most of the securities were unrated — often an indication that analysts aren’t sufficiently comfortable with long-term forecasts to predict the safety of a bond issue for investors.

Trade data posted online indicated one of the six groupings of bonds sold at a yield of 4.22 percent, a high figure given current market conditions. Investors accept low yields when they are highly confident a bond will be repaid.

Bloomberg reported that the yield indicates investors are insisting on a “steep premium to compensate for the risk.”

The convention business has been pounded by the pandemic, compelling officials in a number of states to resort to unusual measures to help convention authorities stay afloat.

“On the surface convention centers sound like a negative story because who’s going to a convention anytime soon?” Cooper Howard, director of fixed-income strategy at the Schwab Center for Financial Research, told Bloomberg. “But many of them have some other type of support.”

Bloomberg reported that the Georgia authority capitalized early interest payments on the bonds — borrowing the money necessary to make them and setting it aside — in a move to increase investor confidence.

Bloomberg quoted University of Texas at San Antonio professor Heywood Sanders as having said convention attendance was declining even before pandemic struck and he would be surprised if it were to bounce back anytime soon, even after COVID-19 recedes, given the rising comfort with online gatherings.

“Many of those virtual meetings will continue, either fully virtual or in parallel with in-person events,” he said, according to Bloomberg. “Those will have the effect of reducing attendance at regular annual events. It’s inevitable.”