Fitch Dwngrs Sunset Retirement Communities, OH to 'BBB+'; Stable Outlook.Business Editors NEW YORK--(BUSINESS WIRE)--March 6, 2003 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 downgraded to 'BBB+' from 'A-' the rating on the $22.2 million County of Lucas, OH health care facilities revenue, refunding and improvement bonds, series 2000A, issued on behalf of Sunset Retirement Communities (SRC (SouRCe) Contrast with DST, which is an abbreviation of "destination." ). The Rating Outlook is Stable. SRC's series 2000B adjustable rate Adjustable rate Applies mainly to convertible securities. Refers to interest rate or dividend that is adjusted periodically, usually according to a standard market rate outside the control of the bank or savings institution, such as that prevailing on Treasury bonds or notes. demand bonds in the amount of $15 million are secured by a letter of credit and are not rated by Fitch. Substantial investment losses combined with fill up losses and construction delays on new units have weakened SRC's balance sheet. Days cash on hand slipped from 1,667 days at Dec. 31, 2000 to 763 days at Dec. 31, 2002 (unaudited). With nearly 60% of SRC's $21.4 million endowment invested in equity securities, fiscal 2002 realized gains and investment income totaled negative $879,000, down from a high of $3.1 million in fiscal 1999. With negative investment returns and new unit fill-up (begun in January 2002), SRC's net deficit for fiscal 2002 of negative 51.2% was twice its projected loss of negative 25.5%. Debt service coverage was below 0.0 times (x), though interest expense has been funded through April 2003. Management's 2003 budget shows coverage of 1.0x and close to break even excess income. Failure to meet that budgeted level would be an event of default and will result in rating pressure. Other concerns include a 38 unit wing of small and outdated residential units, and a new assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. competitor struggling to fill units. Fitch believes SRC retains a sizeable endowment for debt service payment should cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses fall short. Facility occupancy is near stabilization, senior management is experienced and largely well tenured ten·ured adj. Having tenure: tenured civil servants; tenured faculty. Adj. 1. tenured with the facility, and its primary market area is solid. Fill up of new units is largely on schedule, despite large construction delays, and management expects new unit fill-up to be complete in summer 2003. SRC operates 65 independent living units, 143 assisted living units, and 73 skilled nursing beds on two campuses in Toledo and Sylvania, Ohio Sylvania is a city in Lucas County, Ohio, United States. The population was 18,670 at the 2000 census. Sylvania is a middle-class suburb of Toledo. Geography Sylvania is located at (41.711450, -83. . |
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