Casa de las Campanas rating affirmed at BBB+ as occupancy recovery supports outlook

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Casa de las Campanas rating affirmed

Highlights

Fitch affirms Casa de las Campanas' BBB+ Long-Term Issuer Default Rating with Stable Outlook, citing occupancy recovery to 93.2% for independent living units by July 2026.
The operating ratio improves to 90% in fiscal 2026 from over 100% in 2023-2024, while recent cost controls and occupancy gains support financial stability.
Unrestricted cash and investments reach $116 million in 2025 (170% cash-to-adjusted debt, 989 days cash on hand), though rating risks include liquidity declines or significant debt increases.

Occupancy recovery and credit profile

As reported by Fitch Ratings, The Casa de las Campanas, CA's Long-Term Issuer Default Rating is affirmed at 'BBB+' with a Stable Outlook, reflecting a recovery in operations and demand to historical levels. Independent living unit occupancy rises to 93.2% as of July 31, 2026, from the high 80% range in 2022, while the operating ratio returns to 90% in fiscal 2026 from more than 100% in 2023 and 2024.

Fitch says demand for independent living generally exceeds 93% before 2022, then falls to 88% and remains soft until summer 2024. Management reports in September 2024 that occupancy is strengthening through increased marketing efforts, and Fitch now expects recent occupancy gains and ongoing cost controls to keep the operating ratio below 100% and lift the net operating margin to 0% over the coming years.

Casa de las Campanas operates as a single-site life plan community in Rancho Bernardo, California, about 25 miles north of San Diego. The community has 509 total units in service, including 359 independent living units, 55 assisted living units, 27 memory care units and 97 skilled nursing beds, and has been managed by Life Care Services since 1997.

Expansion plans and financial resilience

Fitch says the community's location overlooking Lake Hodges, together with high household income, strong real estate values and low unemployment in its market, supports revenue defensibility despite increased competition in recent years. The agency adds that modest pricing and the type-A contract structure help preserve CDLC's overall revenue profile, even if occupancy in higher levels of care is weaker.

Management is considering remodeling the existing healthcare center and possibly expanding independent living units, and Fitch believes the community can absorb some additional debt at its current rating level. The agency says added units and a modernized healthcare center should be accretive over the longer term, although maximum annual debt service coverage would likely soften from the five-year audited average of 5x if new borrowing is taken on.

Liquidity remains a key support for the rating, with unrestricted cash and investments of $116 million in audited 2025, equal to 170% cash-to-adjusted debt, and 989 days cash on hand. Fitch says negative rating pressure could emerge from liquidity weakening, debt rising enough to push cash-to-adjusted debt near 90%, independent living occupancy staying below 90%, or operating ratios consistently exceeding 100%, while sustained cash-to-adjusted debt above 140% after capital spending could support positive rating action.

Our earlier report on Fitch’s affirmation of Pacific Gas and Electric Company’s BBB issuer default rating with a Stable Outlook outlined how the utility maintained investment-grade support as it continued reforms after wildfire-related liabilities. It highlighted progress in infrastructure upgrades, regulatory compliance, and risk management, with the stable outlook reflecting expectations of near-term operational steadiness and preserved credit quality.

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