Apple Valley Senior Living Bonds: Early Warning Signals
How municipal intelligence revealed market saturation risk two quarters before credit deterioration.
The Bond at Risk
$147.97M Senior Living Revenue Bonds, Series 2016 (City of Apple Valley, MN), backed by eight senior living communities including The Timbers. With repayment solely from operating revenues and no city backing, this issue was vulnerable to market dynamics.
By Q2 2025, the warning signs were clear: Net deficit of $2.15M, DSCR of 0.81x (below 1.05 covenant), with high leverage and market competition pressuring cash flows.
What Council Meetings Revealed
While traditional credit analysis focused on historical financials, &Evergreen was tracking something more telling: Apple Valley's city council meetings throughout Q2 2025 revealed a pattern of approvals that would devastate The Timbers' competitive position.
April 10: Presbyterian Homes Expansion
City approved $64M+ in new bonds for 153-unit expansion at Cobblestone Lake—direct competition offering independent, assisted, and memory care.
Councilwoman Grenell objected to frequent conduit issuance, citing risks to city bonding capacity.
May 22: Apple Valley Villa Expansion
Approved new 60-unit, 64-bed skilled nursing facility—adding to senior care saturation.
“Municipal credit risk surfaced in council meetings two quarters before Moody's downgraded the rating.”
— Municipal Bond Portfolio Manager
The Intelligence Edge
Traditional bond analysis would have missed this story until occupancy reports showed the damage. &Evergreen identified the competitive threat and policy risk months before they impacted financials.
The result: Investment teams using &Evergreen adjusted positions before the market recognized the elevated refinancing risk and occupancy pressures facing The Timbers.
Key Risk Signals
$64M+ competitive expansion approved
Council dissent on conduit bond policy
Market saturation acknowledged by officials
Refinancing constraints emerging
DSCR covenant breach (0.81x vs 1.05x)
Bond Details
Issue: $147.97M Series 2016
Issuer: City of Apple Valley, MN
Revenue Source: Operating revenues only
Current DSCR: 0.81x
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