By RUTH DALRYMPLE
The University of Mary Washington Foundation, which owns Eagle Landing, has just announced that it will be refinancing the debt associated with the Eagle Village apartment building in order to take advantage of more favorable interest rates.
According to Jeff Rountree, CEO of the UMW Foundation, the refinancing and restructuring process will only affect the Eagle Village apartments, which is non-taxable debt. The refinancing will not include any of the retail or commercial side of the Eagle Landing complex.
The Fredericksburg City Council formally approved the refinancing on Oct. 11 for “Eagle Village student housing, the related portion of the parking garage and the Route 1 pedestrian bridge,” according to the council memo.
“The new bonds, expected to close this November, are expected to be about $80 million and include the cost of terminating the current interest rate swap,” according to an Oct. 5 memo to the Fredericksburg City Council.
The Bank of America will underwrite the debt, meaning that the bank will evaluate the financial risk of the situation.
The refinancing will eliminate some of the bond covenants that are currently attached to the debt. Bond covenants are agreements between the issuer and holder of a bond that either require or prohibit using the bond money on certain items.
“Lifting these covenants will allow greater long-term cost of living affordability for students, fully integrate Eagle Landing into the university’s housing system with a new master lease, remove commercial bank letter of credit renewal and pricing risk, and enable greater operational flexibility for the Foundation in carrying out projects for the benefit of the university when requested,” Rountree said.
This could mean that Eagle Landing apartment price rates could be reduced but will mostly likely mean that there will be no future price hikes, according to Rick Pearce, vice president of administration and finance and chief financial officer.
The restructuring means that the UMW Foundation will now have a low fixed-interest rate that will not fluctuate instead of a variable interest rate, which may rise or fall depending on the economy. This change will give UMW more elasticity over the management of Eagle Landing.
Sophomore Christine Tran said, “If prices do go down, I might consider living on campus again.”