Children’s Health and UT Southwestern Medical Center unveiled plans Wednesday for a $5 billion pediatric health campus in Dallas that will be financed in part with bonds.
The project, which is expected to be completed in six to seven years, includes an approximately 2 million-square-foot hospital with three towers that
“Spanning more than 33 acres, the new pediatric campus offers a patient-centric design that can meet the rapidly increasing need for more pediatric services from the most common to the most complex,” the statement said.
Children’s Heath told The Bond Buyer the project “will be jointly funded using a mix of operating income, liquidity reserves, debt issuance, and donations.”
“North Texans are incredibly generous, and we look forward to working with members of the community to make this project a reality,” it said, adding that Children’s Health and UT Southwestern do not receive any reimbursement from the county, state or UT System for clinical facilities or operations.
Children’s Health is rated AA with stable outlooks by Fitch Ratings and S&P Global Ratings. Moody’s Investors Services, which rates it Aa3, revised the outlook to positive from stable in 2022, citing anticipated continued strong operating performance and expected deleveraging and maintenance of strong liquidity as the health system expands its footprint.
Ahead of the issuance of revenue bonds in 2020,
The health system had
S&P analyst Patrick Zagar said the “unique” partnership between Children’s Health and UT Southwestern Medical Center for the project is a positive and furthers their existing joint pediatric enterprise.
“Given this partnership, the long time horizon for construction, and Children’s Health’s existing financial profile caliber, our current expectation is the AA rating can be maintained as the new facility project moves forward,” he said in an email.
Fitch analyst Richard Park said the rating agency’s expectation is capital expenditures would remain above depreciation expense over the next five years to capture the service area’s high pediatric population growth.
“Strong cash flow margins and philanthropic support should help the organization to sustain healthy balance sheet metrics,” he said in an email.
UT Southwestern Medical Center is part of the University of Texas System, which is rated triple-A.
The Children’s Health project comes as a