The North Carolina Medical Care Commision sold $67.2 million in bonds to finance the development of new apartments in a retirement community.
The commission issued the securities in two series of term bonds. The Series 2024A bonds, consisting of $53.9 million, mature between 2039 and 2054, yielding between 4.19% and 4.92%. The Series 2024B bonds include two sets of term bonds that mature on October 1, 2028, and yield between 3.75% and 4.25%. The securities received a rating of BBB from Fitch Ratings.
The commission will loan the bond proceeds to United Methodist Retirement Homes (UMRH), which will use the funds to expand its facilities.
The rating reflects UMRH’s “strong census across its three campuses, consistently strong operations, and sound liquidity position,” as well as its “ability to successfully execute on its strategic plan,” Fitch analysts wrote.
The bond proceeds will fund the construction of 57 new “independent living units” at a retirement community in Greenville. Of the units in development, 52 have already been sold. There are UMRH campuses in Durham and Lumberton in addition to Greenville.
The issuance comes amid broad headwinds for the retirement community industry. Wage inflation remains high nationwide amid a shortage of staff necessary to staff retirement facilities. Fitch warned that these challenges could pose a risk for UMRH’s bond sales.
“The new debt issuance has lessened the previous cushion UMRH had related to its leverage metrics for the rating,” Fitch analysts wrote. “While UMRH’s operations have not experienced major deterioration, it faces the same operational challenges that are impacting the rest of the industry.”
The bonds are limited obligations of the North Carolina Medical Care Commision, payable by UMRH revenue.
B.C. Ziegler and Company served as underwriter on the issuance, purchasing the bonds for close to par.