County Of Hamilton, TN Multifamily Rev Bonds Dwngr 'A-' By Fitch.Business Editors NEW YORK--(BUSINESS WIRE)--July 5, 2001 The County of Hamilton, TN, multifamily housing revenue bonds, $1,330,000 series A and $4,885,000 series B are downgraded to 'A-' by Fitch. The downgrades follow Fitch's annual review of the transaction, which closed in March of 1994. The downgrades are primarily due to a continued decline in debt service coverage ratio The debt service coverage ratio (DSCR), or debt service ratio, is the ratio of net operating income to debt payments on a piece of investment real estate. It is a popular benchmark used in the measurement of an income-producing property’s ability to produce (DSCR DSCR See: Debt-service coverage ratio ). Fitch's calculated DSCR for the trailing 12 months ended 12/31/00 is 1.31 times (x) which is down from 1.53x at origination and 1.34x for the trailing 12 months ended 12/31/99. To calculate the DSCR, Fitch used the net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. derived from the audited borrower financial statements, adjusted it by $200 per unit for capital expenditures, included the interest income of $41,513 from the debt service reserve fund, and applied an average annual debt service of $534,783. The decline in net operating income is primarily due to an increase in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . The DCSR DCSR Defense Supply Center Richmond (Richmond, VA) DCSR Digital Crime Scene Reconstruction DCSR Display and Control/Storage and Retrieval DCSR Deputy Chief of Staff for Recruiting has continued to decline despite the fact that occupancy has increased to 95.2% as of December 31, 2000 up from the year- end 1999 figure of 90.1% and there is currently no new competitive construction in the market. The debt service reserve fund, created at origination to fund any shortfall in debt service payments, had a balance of $675,000 as of December 2000. The capital expenditure reserve fund, which is a standby to fund any capital expenditure, has increased from $54,400 at origination to $110,007 as of year-end 2000. As of June 2001, the series A bonds have paid down to $1,330,000 from $1,865,000 at origination in accordance with the sinking fund sinking fund, sum set apart periodically from the income of a government or a business and allowed to accumulate in order ultimately to pay off a debt. A preferred investment for a sinking fund is the purchase of the government's or firm's bonds that are to be paid amortization required by the documents. The series B bonds remain at their origination level of $4,885,000. The bonds, issued by The Industrial Development Board of the County of Hamilton, TN (Board) for the purpose of financing the '80/20' affordable housing program in the local community, qualify for tax-exempt status. The bonds are secured by the 272-unit Waterford Place apartment complex located in Chattanooga, TN. The property complies with the affordable housing guidelines as set forth by the Board. Fitch's Property Market Metric (PMM PMM Purchase Money Mortgage PMM Project Management Methodology PMM Perpetual Motion Machine PMM Permanent Magnet Motor PMM Professional Murder Music (band) PMM Precision Measuring Machine PMM Power Management Mode ) volatility score is a three for the area and property type. Fitch will continue to monitor closely the property's performance as part of its ongoing surveillance. |
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