The final lease in the complex credit-tenant lease financing deal was signed June 14 and, after finalizing the loan and supporting documents, the deal was closed July 12. The total cost of the project, which includes the design, construction, equipment and payments on the 20-year lease, is estimated at about $4.76 billion. Wolf said the GSA estimates the size of the facility is nearly the largest project it has ever been involved in constructing.

The Planned Industrial Expansion Authority of Kansas City owns the land, which gives the project a real estate tax exemption. PIEA essentially leased the property to CenterPoint Zimmer, which had won a bid process a few years ago to develop and lease the land. In order to arrange the financing, Wolf said, the Industrial Development Authority of Kansas City issued $687.1 million in taxable bond offerings. Those bonds were purchased through a private placement by a group of 14 institutional investors who Wolf said were confidential but included household name insurance companies and pension advisers.

Once CenterPoint Zimmer is finished with the development and construction of the project, it will lease the facility to the GSA, which is acting on behalf of the NNSA in the deal. CenterPoint Zimmer is borrowing the funds needed to build the facility and has contracted with Kansas City-based JE Dunn Construction Co. to build it, Wolf said.

Once the project is completed, GSA is then obligated to make rent payments over the next 20 years to pay off the debt service obligations. Part of the rent includes payment in lieu of taxes, which will be paid to various taxing authorities to offset the real estate tax-exempt status, Wolf said. The GSA was involved in the deal, he said, because it has more flexibility in entering such leases than the NNSA does on its own.

The deal was complex because it had to be structured to accomplish two goals of the debt investors, Wolf said. It had to ensure that, if the developer defaulted before completing the project, the investors would have an opportunity to cure that default. The investors also had to know that once the GSA takes over the lease payments, it would have no right to terminate the lease or abate the payment of rent, he said.

"Those were the two critical objectives we had to achieve, and achieving them was why we took as long to complete the transaction," Wolf said.

Ballard Spahr's client, CGA, was brought on early in the process to advise CenterPoint on structuring of the lease and debt as well as to assist in finding investors. The investors group was represented by Dechert Boston partner Lewis A. Burleigh .

CenterPoint was represented by Kevin Breslin and Mark Richmond of Richmond & Breslin in Chicago, who Wolf said were very involved in all areas of the deal and responsible for the "lion's share" of the work. Gary A. Anderson of Gilmore & Bell in Kansas City was bond counsel and Stephen S. Sparks of Bryan Cave's Kansas City office represented the PIEA and IDA.

Wolf said Ballard Spahr's involvement focused on providing legal advice related to structuring the lease and construction contract. Alan S. Ritterband in the Philadelphia office worked closely with CenterPoint's attorneys to negotiate the construction contract with JE Dunn, Wolf said. Glenn L. Unterberger in Philadelphia assisted with some environmental litigation that held up the negotiation of the lease and the finalization of the transaction for "an extended period of time," Wolf said.

Baltimore-based partner Thomas A. Hauser worked with Wolf on the real estate and corporate structuring side of the deal, assisting in drafting and negotiating the loan documents. Ballard Spahr partner Charles R. Moran and associates Benjamin A. Kelley , Michael T. Kersten and Anna A. Mahaney assisted on the deal out of Baltimore.

Deal Details

The campus of buildings will house about 2,500 workers in a rentable 1,509,950-square-foot space. The government lease includes an annual rent of $61.5 million. The total contract value over the 20-year term is $1.23 billion, the NNSA said in a statement.

The campus will be located eight miles south of the NNSA's current location. A phased move is scheduled to begin in late 2012 with full occupancy expected in 2014.

Zimmer Real Estate Services of Kansas City, Mo., will be the property manager for the new campus and a development consultant to CenterPoint Zimmer during construction.

GSA partnered with the NNSA in 2006 to assist with the real estate needs associated with the transformation of the Kansas City Plant. Operated by Honeywell Federal Manufacturing & Technologies , the plant produces and assembles non-nuclear components for the nation's nuclear weapons. Relocation of the plant is projected to save the government about $100 million annually.

The new campus will consist of manufacturing, laboratory, office and warehouse space. It is expected to receive a gold-level rating in the U.S. Green Building Council's LEED program.