The Washington Airport Authority is going on the market for $829 million

The Washington Metropolitan Airports Authority plans to go public Wednesday with $829.4 million in airport system revenue and bond repayments.

“Traditionally, we’re in the market around the same time every year. We either have a reimbursement opportunity or a new cash need,” said Andrew Rountree, the authority’s senior vice president of finance and CFO.

“The refund facility is about $400 million and the new money issues are about $429 million,” Rountree said. “The new money is to fund our ongoing capital building program.”

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BofA Securities, Inc. is the senior manager on the deal, Frasca & Associates is municipal counsel and Squire Patton Briggs is bond counsel.

The deal will consist of tax-exempt bonds with interest subject to the alternative minimum tax. Interest will also be tax-exempt in the District of Columbia and Virginia.

MWAA includes Ronald Reagan National Airport, Washington Dulles International Airport and Dulles Toll Roadwhich helped finance the extension of Metrorail’s Silver Line to Dulles Airport.

After the line was completed, the MWAA turned management of the Silver Line over to the Washington Metropolitan Area Transit Authority.

MWAA is seeing a full return of traffic and revenue from the pandemic years.

“Our total operating income in 2019, which was the last full year before the pandemic, was about $766 million, and our operating income in 2023 was $853 million,” Rountree said.

Much of the revenue growth is related to non-aeronautical revenue and concessions, which are showing net growth of 20.5% through 2022, according to an online investor presentation on the deal. Parking revenue is up 17.5% with food and beverage sales up 28.7% over the same period. The combination of the two airports and the number of scheduled passengers amounts to 24.3 million in 2019 compared to 25.1 million in 2023.

The two airports have also benefited from Law on Investments in Infrastructure and Works through the Airport Infrastructure Grants program. “Reagan National has received about $22 million annually over three years for a total of $66.7 million and Dulles International very similarly has $67.7 for AIG to date,” Rountree said.

Dulles also competed for and won Airport Terminal Program grants of $51 million in 2022, $20 million in 2023 and $35 million in 2024.

MWAA’s capital construction plan includes construction of a new East concourse at Dulles that will cost $749 million, with a target opening date of 2026. Terminal Two at Reagan will receive a $63.9 million makeover that is scheduled for completion in 2025. Work on the runway at Reagan will cost $370.4 million and will be matched by $125.3 million in federal grant money.

Before the sale, the authority received appraisal statements from the three agencies that appraised the deal. Moody’s Investors Service rates the income bonds MWAA Aa3, S&P Global Ratings AA-minus and Fitch Ratings AA-minus. All three assign consistent views.

“The rating reflects MWAA’s very strong credit attributes, including the strength of its complementary airport system with dual major hubs serving the District of Columbia’s strong and growing air trade service area; balanced mix of operators across the system; the progress of the capital program at both airports; and its stable financial profile,” Fitch said in his report.

“The Aa3 rating incorporates Moody’s expectations of adequate credit metrics, despite the addition of incremental debt to partially fund the recently updated capital construction program. The airline’s new operating and lease agreement, valid through 2039 , predicts about $9.4 billion in construction costs at the two airports,” the rating agency said.

“Between 2024 and 2027, the authority plans to issue approximately $4.4 billion in new debt to partially finance this new capital plan and some remaining work items from the previous plan,” Moody’s said.

Moody’s notes that if the authority’s debt service coverage ratio were to fall below 1.1 a rating downgrade could result. The authority lists its DSCRs at 2.77 for 2023 and a forecast of 2.54 in 2024. The number fell to a low of 1.40 in 2020 during the pandemic.

“The rating reflects our view of MWAA’s aviation enterprise benefiting from resilient financial and demand characteristics through various economic cycles and shocks due to proactive management actions and its dominant role and strategic importance in surrounding regions,” the analyst said. credit of S&P Global Ratings, Kenneth Biddison.

“The rating further reflects MWAA’s exceptionally strong enterprise risk profile and strong financial risk profile supported by recent strong investment trends, which totaled 25.1 million in fiscal 2023, 12.4 from Dulles International and 12.7 million from Reagan National,” he added.

According to the MWAA as of December. At 31, 2023, the Aviation Enterprises Fund’s Liquidity would allow it to operate for 1,017 days using cash on hand. As of April 1, 2024, the authority reports having $248.7 million in construction funds and $200 million in a revolving line of credit.

Current debt projections show a gradual increase from just over $200 million in 2024 to a peak in 2031 that still remains below $300 million.

Reagan National serves 108 nonstop destinations, up from 97 in 2019, according to an online investor presentation about the deal. Dulles services 140, up from 144 in 2019. Plans for both airports are emerging slightly for early 2024.

MWAA is implementing electrification and efficiency initiatives designed to achieve a LEED Silver rating for the East Concourse at Dulles under the US Green Building Council’s “Leadership in Energy and Environmental Design” environmental and sustainable performance of buildings. Silver is the second lowest of its four levels.

Electric vehicle charging infrastructure is also planned along with all electric buses.

A 100-megawatt solar farm spread over 835 acres near Dulles is also being planned in partnership with Dominion Energy.

The extension of the metrorail system to Dulles is also playing a role in the airport’s recovery story. MWAA financed the construction of the rail line with support from surrounding counties and revenue from toll roads, which is a separate operating budget from airports.

According to Rountree, the Dulles station has the highest number of passengers on the line.

“Airlines in particular are very excited to have that rail station at our main international airport. It’s the gateway to the nation’s capital,” he said.