Fitch Affirms PHS Senior Living (NJ) 1998 Obligated Group at 'A-'; Outlook to Negative.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed the rating of 'A-' of the approximately $17.6 million New Jersey Economic Development Authority The New Jersey Economic Development Authority (EDA) is an independent, quasi-governmental self-supporting entity in the U.S. state of New Jersey dedicated to broadening and expanding the state's economic base. revenue bonds (Presbyterian Homes & Services [PHS (Personal Handyphone System) A TDMA-based cellular phone system introduced in Japan in mid-1995. Operating in the 1880-1930 MHz band, PHS uses microcells that cover an area only 100 to 500 meters in diameter, resulting in lower equipment costs but requiring more base ] of New Jersey Obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. Group) series 1998A and $42 million New Jersey Economic Development Authority revenue bonds (PHS of New Jersy Obligated Group) series 1998B1 and 1998B2 (taxable). Fitch has revised the Rating Outlook to Negative from Stable. Fitch's rating applies only to PHS Senior Living's 1998 Obligated Group and not to any other debt of the system. The rating affirmation is supported by PHS' strong historical operating performance, low leverage as evidenced by MADS as a percentage of revenue of only 5.5%, solid coverage of maximum annual debt service averaging approximately 3.2x in the last four fiscal years, long operating history in New Jersey, historically high occupancy levels in all levels of care, and a deep management team. PHS has sizable operations outside the obligated group with the obligated group making up approximately 56% of system revenues in 2008 and 53% of assets. The Obligated Group's financial performance has been solid over the past five years with excess margins averaging approximately 4.8% due to sound operating activity. Operating activity in 2008 eroded due to lower independent living unit (ILU) occupancy across the obligated group and increased interest expenses. Key rating concerns focus on the Obligated Group's below average liquidity for the rating category and the level of support given to non-obligated system. Currently, the Obligated Group has approximately $16 million in loans to PHS affiliates. The terms of the loans vary and interest is accrued at market rates. PHS management doesn't anticipate repayment of these loans over the near term. The Obligated Group has agreed to provide a $10 million operating support agreement to Navesink Harbor, an acquired continuing care continuing care a professional convention that a veterinarian who is treating an animal is obliged to continue treating that case unless an arrangement is made with its custodian to transfer the care to another practitioner or to a specialist. retirement community (CCRC Noun 1. CCRC - an agency in the Department of Defense that is a national center for research on all aspects of injury control and casualty care Casualty Care Research Center ) that is undergoing an $80 million expansion. Fitch has excluded the full amount of the operating support from the Obligated Group's unrestricted cash in its analysis. As of Dec. 31, 2008, the Obligated Group's adjusted liquidity position was weak for the rating category, with 195 days cash on hand and cash to debt of 59%. The Negative Outlook reflects the renewal risk surrounding PHS' letter of credit agreement (LOC LOC - lines of code ) with Wachovia on its variable-rate debt, which is set to expire on Jan. 27, 2010. Although management anticipates having an LOC renewal agreement in place by the expiration date Expiration Date The day on which an options or futures contract is no longer valid and, therefore, ceases to exist. Notes: The expiration date for all listed stock options in the U.S. , there exists the possibility that PHS could be forced to pay the principal amount ($42 million) at that time, which Fitch views negatively. Additionally, continued depressed ILU occupancy is a credit concern as occupancy dipped to a low of approximately 87% for the six-month period ending June 30, 2009. The PHS 1998 Obligated Group consists of three CCRCs (Meadow Lakes- 259 ILUs, 28 assisted living units (ALUs), 16 dementia units and 60 nursing beds; Monroe Village - 286 ILUs, 28 ALUs and 60 nursing beds; and Crestwood Manor - 368 ILUs and 64 nursing beds) and a standalone assisted living facility, Haddonfield, consisting of 52 AL units. PHS Senior Living also owns two other CCRCs (StoneBridge and Navesink Harbor) and three assisted living facilities (Watchung Ridge, Stony Brook and Waterford Glen), as well as 16 affordable housing projects outside the 1998 Obligated Group. For the fiscal year ended Dec. 31, 2008, the 1998 obligated group had total revenues of approximately $76 million. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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