Someone has to explain Middlesex County defaulted payments for a $20 million loan arranged by New Brunswick Development Corporation (Devco). The loan was funded in 2005 by Casino Reinvestment Development Authority (CRDA) to construct The Heldrich Hotel & Conference Center. The president of Devco, Christopher Paladino and Executive Director of CRDA, John Cantalupo shared their insight about the default on February 29th, 2016 to Press of Atlantic City. Subordinate bondholders aren’t pleased with the default because they haven’t received payments in years. A schedule to the company’s financial statements showed senior bondholders were repaid $30 million with five percent interest.
The president of Devco explained that the hotel Middlesex County Improvement Authority had to use its money to help pay for expenses. He also said that Heldrich had to pay $1.2 million in real estate taxes that was produced over the years and the employees. Executive Director of CRDA acknowledged the defaulted loan and said that the agency issued the loan knowing the risk of subordinated lenders being the last to be repaid.
Cantalupo also said the risks involved are to make the loans available for senior lenders to participate. He continued by saying, there are “tangible economic effects that are measurable in the Heldrich Hotel case.″ The lender and developer provided some insight to the subordinate bondholders on why they aren’t being repaid. Casino Reinvestment Development Authority knew when the loan was made it would be a “deeply subordinated lender″.
Devco, also known as New Brunswick Development Corporation is an urban real estate organization. The mission of the company is to development mixed-use projects and redevelopment projects in the City of New Brunswick and New Jersey.