Fitch Upgrades Lutheran Retirement Ministries of Alamance Co. (NC) Revs to ‘A-‘; Outlook to Stable
--
The Rating Outlook is revised to Stable.
SECURITY
Bond payments are secured by a pledge of gross revenues and a first mortgage lien.
KEY RATING DRIVERS
STRONG FINANCIAL PROFILE: The upgrade to 'A-' is attributed to Twin Lakes' good liquidity position, consistently solid debt service coverage, and strong profitability and cash flow.
MODERATING DEBT BURDEN: Twin Lakes' debt burden has moderated over the last four fiscal years as evidenced by a decreased debt-to-net available of 3.1x in fiscal 2016 (ended
GOOD DEMAND FOR SERVICES: Twin Lakes' favorable reputation has allowed it to maintain solid independent living unit (ILU) occupancy of over 90% over the last four fiscal years, despite operating in a competitive service area with four other Type-C communities. ILU occupancy was a solid 91% in fiscal 2016, assisted living unit (ALU) and skilled nursing facility (SNF) occupancies were 83% and 87, respectively.
UPCOMING CAPITAL PROJECTS: Twin Lakes is in the process of constructing 22 new garden homes on its campus. Construction is expected to be completed in April of 2017 and has been on time and on budget. Longer-term plans also include the construction of a replacement SNF on the current campus.
RATING SENSITIVITIES
STABILITY AT THE CURRENT RATING LEVEL: Fitch expects Lutheran retirement Communities of
CREDIT PROFILE
Twin Lakes operates a Type-C continuing care retirement community (CCRC) in
STRONG FINANCIAL PROFILE
Twin Lakes'
Twin Lakes' operating profitability has been very stable over the last four years, with operating ratio averaging a very strong 89.5%, well ahead of the 'A' median of 94.9%. Net operating margin adjusted has also averaged a strong 27.5% over the time period, ahead of the 23.6% 'A' category median. Fitch believes that Twin Lakes' operating profile is more consistent with a higher rating category.
Maximum annual debt service (MADS) coverage has been very consistent over the last four years, and was a solid 2.5x in fiscal 2016. In addition, revenue-only coverage has averaged 1.2x over the same period, equal to the 'A' median.
MODERATING DEBT BURDEN
Twin Lakes' debt-to-net available of 3.1x and adjusted debt/to capitalization of 25.5x in fiscal 2016 have both moderated from 4.0x and 33x, respectively, in fiscal 2013, and were well ahead of Fitch's 'A' medians of 4.3x and 47.4x. The decrease in leverage is attributed to the rapid amortization of Twin Lakes' debt (approximately
UPCOMING CAPITAL PROJECTS
Twin Lakes started construction of 22 new garden homes in
Longer-term plans also include the construction of a replacement SNF on the current campus. Twin Lakes' debt service payments fall by approximately 50% after 2019 and management is anticipating tying the construction, and anticipated debt issuance, to that time-frame. Initial projections expect a total cost of
DEBT PROFILE
Twin Lakes' outstanding series 2009 floating-rate bonds are directly held by BB&T Corporation ('A+/F1'/Outlook Stable) through
DISCLOSURE
Twin Lakes covenants to provide audits within 120 days of each fiscal year's end, quarterly statements within 45 days of quarter's end (including occupancy statistics), annual budgets and management letters within 120 days of fiscal year's end, and any material events. Fitch views the disclosure requirements imposed by the
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria
Not-for-Profit Continuing Care Retirement Communities Rating Criteria (pub.
https://www.fitchratings.com/site/re/868824
Revenue-Supported Rating Criteria (pub.
https://www.fitchratings.com/site/re/750012
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1014979
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1014979
Endorsement Policy
https://www.fitchratings.com/regulatory
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
Copyright © 2016 by Fitch Ratings, Inc.,
The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from
For
View source version on businesswire.com: http://www.businesswire.com/news/home/20161117006269/en/
Primary Analyst
Dmitry Feofilaktov
Associate Director
+1-212-908-0345
or
Secondary Analyst
+1-212-908-0545
or
Committee Chairperson
+1-312-368-2059
or
Media Relations
Elizabeth +1-212-908-0526
[email protected]
Source: Fitch Ratings
Allsup Celebrates 275,000 Successful Customers Receiving Social Security Disability Insurance Benefits
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News