East Hampton, New York, sold debt on Thursday, joining a list of well-off US tourist destinations that have tapped the market this summer.
Sitting on the easternmost tip of Long Island, the town encompasses Montauk, Amagansett and other affluent areas, and for decades has been the favored summer getaway for wealthy New Yorkers, including those in financial markets. Now the persistence of remote work schedules in the post-pandemic world has made the Hamptons, as the region is known, a viable longer-term residence.
East Hampton took bids on $42.2 million of its triple-A-rated debt. While some proceeds will refinance existing debt, money will also go to help compliance with the Americans With Disabilities Act, build new ballfields, spruce up the Montauk Playhouse and “improve the town’s ability to efficiently provide necessary services,” said Town Supervisor Peter Van Scoyoc.
“People come earlier and stay later and a larger percentage of people are now making this their full-time home,” Moody’s Investors Service Inc. Senior Analyst Douglas Goldmacher said in an interview.
East Hampton joined a list of wealthy US tourist destinations that have sold debt this summer. Bar Harbor, Maine, priced about $50 million this week, while in July Newport Beach, California, issued $26.1 million and Miami Beach, Florida, offered about $97 million.
The East Hampton deal went well given its pristine credit rating and name recognition, said Anthony Nash, senior vice president at Capital Markets Advisors, the adviser on the transaction. He called the town one of his “easy clients.”
“East Hampton’s obviously a pretty well known name, both in New York and I think just generally around the country. People know what the Hamptons are,” he said. “They get more interest than most.”
The notion that working from home is here to stay is getting some pushback, including on Wall Street. JPMorgan Chase & Co. ended remote arrangements for its managing directors in April, saying they now must be in the office every weekday.
Read: Hybrid Work Wins Over Traders Enough to Quit Over It: MLIV Pulse
Still, workers who went to the office in 10 of the largest U.S. business districts fell to 49.2% of pre-Covid-19 levels in the week ended July 26, according to data from Kastle Systems. They said the depressed level “is most likely due to employees out on summer vacations.”
US census data shows little population change in East Hampton between 2010 and 2020. But Goldmacher said the prevalence of second homes in the region could obfuscate the reality of the town’s demographics.
East Hampton sells debt annually, and Goldmacher said the growing number of non-seasonal residents isn’t materially influencing the town’s borrowing patterns. “But if the roads are being used more, obviously you’re going to need to repair them sooner,” he said.
Moody’s gives East Hampton a top-credit rating rating because of the town’s “affluent and growing economy.” The typical home value in East Hampton is about $1.8 million, according to data from Zillow. The bonds are backed by property taxes.
The East Hampton debt sold at a true interest cost of 2.676%, said Nash of Capital Markets Advisors.
BC Capital Markets snapped up $20.16 million of the bonds, while JP Morgan Chase & Co. purchased $19.93 million of short-term notes that were part of the sale.
The deal received 13 bids, greater than the four to 10 bid range typical of many sales, Nash said.
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