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COVENANT RETIREMENT COMMUNITIES BONDS RATED 'BBB' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Jan. 7 /PRNewswire/ -- Fitch rates 'BBB' the following debt to be issued by or on behalf of Covenant Retirement Communities, Inc.:
 -- $7,245,000, City of Buffalo, Minnesota Revenue Bonds, Series 1992
 -- $10,725,000, Connecticut Development Authority Revenue Bonds,
 Series 1992
 -- $15,910,000 Taxable Five-Year Extendible First Mortgage Bonds,
 -- Series 1992 (The extendible demand feature is not rated.)
 Affirmed Outstanding Ratings:
 -- $12,150,000 Illinois Health Facilities Authority Revenue Bonds,
 Series 1992A BBB
 -- $11,170,000 City of Plantation, Florida, Health Facilities
 Authority Revenue Bonds, Series 1992 BBB
 -- $13,875,000 Taxable, Senior Secured Notes Dated Feb. 28, 1991,
 Series C and D BBB
 The geographic diversity of Covenant Retirement Communities, Inc. and its seasoned history of operations demonstrate its ability to pay debt service. Covenant's communities enjoy stable demand, as evidenced by occupancy rates averaging in the mid-90 percent range and long waiting lists. No unfunded future service obligation is present. As of the audited fiscal year ended Jan. 31, 1992, unrestricted cash, at $23.3 million or 130 days cash-on-hand, is adequate. Historic pro forma debt service coverage is strong at 2.10 times(x) for fiscal 1992.
 While cash flow has been consistently good for the past several years, it is predominantly related to turnover and the attendant receipt of advance fees. When measuring debt service coverage by revenues only, the historic pro forma coverage is only 0.44x. As such, Covenant depends heavily on advance fees to service debt.
 In two of the last four fiscal years since adopting a new rule from the American Institute of Certified Public Accountants, Covenant had accounting losses. In fiscal 1991, the bottom line loss was $2 million, exacerbating a negative fund balance. As of Jan. 31, 1992, the fund balance stood at negative $31.3 million.
 However, over the next several years, Covenant is expected to surpass its recent financial performance. Covenant's free cash flow should improve by slowing its principal amortization and accessing the low-cost, tax-exempt debt markets to replace high-cost taxable debt.
 -0- 1/7/93
 /CONTACT: Edward Merrigan of Fitch, 212-908-0513/


CO: Covenant Retirement Communities, Inc. ST: IN: FIN SU: RTG

TS -- NY089 -- 2748 01/07/93 15:29 EST
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Date:Jan 7, 1993
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