NYU Langone Hospitals, the legal entity of NYU Langone Health, received positive ratings from two leading credit agencies—Standard & Poor’s (S&P), which upgraded its rating, and Moody’s Investors Service (Moody’s), which affirmed its rating. The ratings were assigned to $475 million of Dormitory Authority of the State of New York (DASNY) NYU Langone Hospitals Obligated Group Revenue Bonds, Series 2020A (2020A), and $575 million NYU Langone Hospitals Taxable Bonds, Series 2020B (2020B).
S&P raised its rating on the DASNY obligated group debt, which includes the debt of Winthrop-University Hospital Assoc., NY, as member of the obligated group, to “A” from “A−”. According to S&P, the rating reflects “sound management execution of NYU Langone Hospitals’ financial and strategic goals that have meaningfully improved financial performance and continue to draw more patients to NYU Langone Health facilities.” At the same time, S&P assigned their “A” rating to the authority’s series 2020A bonds issued for NYU Langone Hospitals and to NYU Langone Hospitals’ series 2020B bonds. In assigning the stable outlook, S&P states that it reflects “NYU Langone Hospitals’ very strong business position, anticipated ability to continue to produce robust margins, and growing balance sheet cushion.”
Separately, Moody’s affirmed the “A3” ratings outstanding on NYU Langone Hospitals’ outstanding debt. Additionally, Moody’s assigned the existing “A3” rating to 2020A bonds and series 2020B bonds. Moody’s outlook is also stable. In confirming its outlook, Moody’s states that it is “anticipating that NYU Langone Hospitals’ very strong market profile and growth strategies will continue to translate into above average and sustained cash flow to support operations, debt service, and large capital spend.”
The debt offering was led by lead underwriter at Goldman Sachs & Co. LLC, co-led by J.P. Morgan Securities LLC and BofA Securities, Inc., and co-managed by RBC Capital Markets. Both series of bonds are expected to be issued as fixed rate securities, maturing over a 30-year period.
On January 28, 2020, Goldman Sachs priced the DASNY tax-exempt bond issuance as worth $464.5 million; the deal consisted of 4 percent coupons with maturities in both 2050 and 2053 with yields to maturity of 3.254 percent and 3.312 percent, respectively, and a 3 percent coupon maturing in 2048 with a 2.874 percent yield to maturity. Additionally, Goldman Sachs priced $571.2 million of taxable corporate Committee on Uniform Securities Identification Procedures bonds with a 2055 maturity and a yield of 3.38 percent.
“These ratings reflect the expectations that NYU Langone Health will continue to enjoy a solid market position in New York City with a broad reach throughout the tristate region,” says Daniel J. Widawsky, executive vice president and vice dean, chief financial officer at NYU Langone Health. “Of note is our continued focus on the growth of our ambulatory practices around a select number of high-quality hospitals, and our steadfast commitment to providing patient-centered, quality care. We believe that these factors are what differentiate us in the marketplace.”
NYU Langone Hospitals remains focused on improving its quality of patient care and operational efficiency. The proceeds of the sale of the series 2020A bonds will finance portions of the following projects.
NYU Langone Health—Cobble Hill Emergency Department
The NYU Langone Health—Cobble Hill emergency department will consist of a 5-story, approximately 160,000-square-foot building that will replace the existing emergency department and house a free-standing emergency department, ambulatory surgery, a cancer center with infusion services, comprehensive women’s services, a diagnostic imaging center, a laboratory, clinical pharmacy, and more than 6,000 square feet of physician office space for members of the faculty group practice. The new Cobble Hill site is located at the former location of Long Island College Hospital.
New Life Building
At the NYU Winthrop Hospital site, NYU Langone Hospitals is constructing an addition on top of an existing facility and renovating portions of the adjacent Potter and North Pavilions to provide for an array of maternal–fetal and other inpatient services, including postpartum rooms, medical and surgical rooms, a neonatal intensive care unit, antepartum rooms, and exam and triage rooms. Comprising approximately 100,000 square feet of new and renovated space, the New Life expansion project will create new single-bedded rooms, improving the patient experience and expanding neonatal intensive care services to accommodate demand.
Garden City Physician Offices
NYU Langone Hospitals has signed a lease to fit out an approximately 270,000-square-foot building located at 1111 Franklin Avenue in Garden City, New York, to provide multispecialty clinical and office space for more than 200 physicians and 400 supporting staff members. This facility will consolidate into a single, modern facility over 30 multispecialty physician practices currently located in 17 locations, improving the patient experience. Specialties will include radiology, women’s imaging and reproductive services, internal medicine, cardiology, pediatrics, and other medicine and surgical specialties. The consolidated location will also create efficiencies across Long Island practices by enabling partial or complete termination of multiple current leases.
Additionally, the 2020B taxable revenue bonds will refund outstanding balances on existing debt and amounts outstanding on lines of credit, including a portion of the Winthrop-University Hospital Association Project, Series 2012 bonds, and for general corporate purposes.