Bloomfield-based Duncaster’s planned campus expansion is moving forward, after receiving approval from the town’s Inland Wetlands Agency earlier this week.
Meantime, Duncaster’s leadership said a recent credit rating downgrade should not affect the cost or progress of the project, which calls for up to 90 new independent living units to be built on an adjacent campus off Loeffler Road and renovations to a portion of the existing campus.
Duncaster, which dates back to 1984 and has gone through several expansions over the years, is what’s known as a life plan community, which means it provides a continuum of housing and health services at every level of need for older adults.
It’s currently home to more than 300 residents who live in independent living apartments or cottage homes. Duncaster also provides assisted living, skilled nursing and memory care services, if and when residents need them.
Credit agency Fitch in early March downgraded Duncaster’s issuer default rating and the rating on $12 million in Connecticut Health and Educational Facilities Authority revenue bonds to ‘BBB-‘ from ‘BBB.’
It also issued a “negative” rating outlook.
Fitch reported that the downgrade “reflects a weakened operating risk profile driven by deterioration in core operating metrics in fiscals 2022 and 2023,” including a “slower than anticipated recovery in independent living unit occupancy, driven by a greater than expected apartment turnover, which has yet to return to pre-pandemic levels.”
Fitch also said Duncaster is facing “inflationary cost pressures in the areas of food, utilities and staffing.”
Additionally, Fitch raised concerns about any added debt from the planned expansion, part of which would be paid back with initial entrance fees from new residents.
“The Negative Outlook reflects Fitch’s uncertainty surrounding Duncaster’s ability to improve occupancy on the existing campus to pre-pandemic levels and execute the marketing and sales of the anticipated (independent living unit) expansion, which would be necessary for Duncaster to absorb the risk of the project,” the ratings agency said.
Despite the downgrade, CEO Kelly Smith Papa said Duncaster still maintains an “investment grade” credit rating. She also said the downgrade was expected due to the anticipated borrowing for the expansion, which is already seeing great demand.
Papa said independent units are popular as Connecticut’s population continues to age, and she reports close to 70% of units in the planned expansion have signed commitments and deposits from tenants.
The project still needs to go before more land use boards, including Planning and Zoning. Construction is expected to begin in 2025, Papa said.
Currently, there is no price tag for the planned expansion. Duncaster is also not certain how much it will have to borrow for the project.
Duncaster CFO Robert Leake said the new credit rating will not affect the project’s costs, and bonds for the expansion will be repaid in two phases.
The short-term repayment, roughly three years, will come from residential entrance fees — which range from $100,000 to $1 million, depending on housing style and residents’ needs — that are paid upon move in. The remainder of the bonds will be repaid over a longer, still undetermined timeline, Leake said.
Papa said there are 1,910 similar life plan communities in the U.S., and only 146 are rated by Fitch.
