Fitch Upgr Redevelopment Auth Of Montgomery Cnty, PA MF Rev Bonds 1993 Ser A.Business Editors NEW YORK--(BUSINESS WIRE)--Oct. 20, 2000 Fitch upgrades its rating on the Redevelopment Authority Noun 1. redevelopment authority - a public administrative unit given responsibility for the renovation of blighted urban areas administrative body, administrative unit - a unit with administrative responsibilities of Montgomery County, PA's $51.2 million multifamily housing revenue bonds tax-exempt 1993 series A to `A' from `BBB BBB A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above. +'. The multifamily housing revenue bonds taxable 1993 series C had paid off in July of 1998. Fitch does not rate the $20.2 million subordinate tax-exempt 1993 series B bonds. The principal balance of the series A bonds has been reduced by approximately 10%, to $51.2 million from $57.0 million at closing. The bonds were issued by the Redevelopment Authority of Montgomery County, PA in Sept. 1993 to finance `80-20' affordable multifamily housing in the county. Consequently, at least 20% of the units must adhere to the income guidelines set forth by the Redevelopment Authority. The transaction is secured by three cross-collateralized and cross-defaulted apartment properties - Kingswood, Brookside, and Forge Gate apartments - containing 1,394 rental units. The upgrade reflects the increase in net operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. of the properties since closing. In addition, Fitch's Property Market Metric score for multifamily properties in Montgomery County, PA is `1', which is the highest score possible. Based on audited financial statements as of year-end 1999, cash flow increased 13% since origination to $8.2 million from $7.3 million. The corresponding 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 ) for the series A bonds has increased to 1.95 times (x) from 1.72x at origination, based on an 8.00% maximum 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 constant. Overall, the weighted-average occupancy of the three properties remains steady at 97% as of June 30, 2000. According to Morgan Properties, the property manager, approximately $600,000 in various capital improvements will be completed over the next 12 months at all three apartment properties. In addition, there are $4.2 million debt service and $1.3 million capital improvement reserves in place. The $4.2 million debt service reserve is sufficient to fund one year of maximum debt service of series A, while the capital improvement reserve is sufficient to fund $952 per unit of improvements. Fitch will continue to monitor the transaction, as surveillance is ongoing. Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in 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 and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA IBCA International Braille Chess Association IBCA Institute of Burial and Cremation Administration IBCA Integrated Business Communications Alliance IBCA International Barbeque Cookers Association IBCA Department of Interior Board of Contract Appeals and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance markets worldwide. |
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