Virginia Beach, Virginia, sold $423.5 million in bonds to finance improvements at a local senior living facility.
The city sold the bonds in two series, the second of which contains three subseries. The Series 2023A bonds, consisting of $258.2 million, mature between 2033 and 2059, yielding between 5.65% and 6.97%. The Series 2023B-1 bonds, consisting of $20.8 million, mature on September 1, 2030, and yield 6.25%. The Series 2023B-2 bonds, consisting of $41.5 million, also mature on September 1, 2030, and yield 5.75%. The Series 2023B-3 bonds, consisting of $103 million, mature on September 1, 2029, and yield 5.375%.
All of the securities are term bonds. They received a rating of BB+ from Fitch Ratings.
The city will loan the proceeds to Westminster-Canterbury on Chesapeake Bay (WCCB), a Virginia retirement community. WCCB is planning the construction of a new residential tower on its campus.
“WCCB’s balance sheet, debt service coverage, and adjusted net operating margin (NOMA) currently reflect metrics that are investment-grade and stronger than the ‘BB+’ rating suggests,” Fitch analysts wrote. “However, with the sizable additional debt and risks associated with the new tower construction project, Fitch believes the rating appropriately reflects WCCB’s forward looking financial profile.”
The expansion of WCCB could mark a significant improvement for elderly care in Virginia Beach, which is the third-most underserved market for senior living in the United States, according to a study by the management consultant Plante Moran.
WCCB is planning to build a new, 226-unit residential tower on the Chesapeake Bay. The facility has already pre-sold 70% of available units. Existing units at the facility are 92% full, with a waiting list stretching into the hundreds, according to Fitch.
The issuance will sextuple WCCB’s outstanding debt. The bonds are limited obligations of the city, secured by a pledge of WCCB’s gross revenue and a first mortgage lien on its property.
B.C. Ziegler & Company and Davenport & Company LLC served as underwriters on the issuance, purchasing the bonds for $421.3 million. Ascension Capital Enterprises, LLC acted as financial advisor.