The Massachusetts Development Finance Agency intends to come to market next week with a roughly $240 million financing for the NewBridge on the Charles project.
According to HJ Sims, which is underwriting the deal along with Bank of America Merrill Lynch, this marks the largest fixed-rate public bond issue for a single site life plan community.
Fitch Ratings assigns a speculative-grade BB-plus rating and a stable outlook for the Series 2017 revenue refunding bonds, the sale of which is expected to close by year’s end.
NewBridge on the Charles covers 162 acres in Dedham, 10 miles southwest of Boston. Proceeds will refund outstanding debt and pay issuance costs. Securing the bonds are a mortgage on the retirement community, a pledge of gross revenues and a debt-service reserve fund partially funded by a roughly $6 million equity contribution from Hebrew Senior Life, which manages the facility.
Sims has worked with NewBridge since the initial financing in 2007 and its relationship with HSL dates to 1992.
HSL is a senior services enterprise affiliated with Harvard Medical School.
“Driven by NewBridge’s attractive facilities, favorable location and high-quality-of-care reputation, demand in all levels of care is strong,” Fitch said in a presale report. Over the past three years, average occupancy levels for its independent living, assisted living and healthcare center are 98.3%, 95.5% and 96.2%, respectively.
NewBridge sports 256 independent living and 51 assisted living units, 40 memory support units and 48 skilled nursing facility beds dedicated to short-term rehabilitative care. It also includes a 220-bed long-term chronic care health center that HSL-related entity Hebrew Rehabilitation Center leases.
According to Fitch, NewBridge’s debt level is “very high,” even after opening for its initial residents eight years ago. After the refunding, said Fitch, NewBridge will have about $240 million of debt outstanding, or 12.1 times net available and 5.6 times for the amount of unrestricted cash and investment balances as of Aug. 31.
Debt moderation and balance sheet metrics more in line with Fitch’s BBB medians could trigger an upgrade, said Fitch.
“Although not anticipated, operating profitability or cash-flow weakness that reduces debt-service coverage or liquidity balances could result in negative rating pressure," said the rating agency.
MassDevelopment typically issues more than $2 billion of conduit bonds each year.
It began in 1998 from a merger of the Government Land Bank and Massachusetts Industrial Finance Agency. The Massachusetts Health and Educational Facilities Authority was merged into MassDevelopment in 2010.
McCarter & English LLP is the agency's bond counsel. Nutter McClennen & Fish LLP is representing the institution. Hawkins Delafield & Wood LLP is representing the underwriters.