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Fitch Rates Village on the Isle, FL 'BBB-'; Outlook Stable.

TAMPA, Fla. -- Fitch Ratings has assigned a 'BBB-' rating to the $36,000,000 Sarasota County Health Facilities Authority revenue bonds (Village on the Isle, Inc. Project) series 2007. Bond proceeds will be used to refund Village on the Isle, Inc.'s outstanding series 1993 A and B bonds, fund a debt service reserve fund and pay the costs of issuance on the series 2007 bonds. The bonds will be priced the week of June 25, through negotiation, by Ziegler Capital Markets Group. The Rating outlook is stable.

The 'BBB-' rating is supported by Village on the Isle's (VOI) strong operating performance over the past four years, solid occupancy across all levels of care, sound service area characteristics, strong debt service coverage of over 2.2 times (x) over the past three years and good physical plant investment over the past six years. VOI has performed exceptionally well over the past four years as a new management team has dramatically improved financial performance and enhanced the physical plant through significant re-investment of cash flow. The facilities have been well maintained despite a high average age of plant of 14.1 years. Fitch toured the facilities and found them to be well kept and attractive.

Fitch's main credit concerns include VOI's below-average liquidity for the rating category as both days cash on hand and cash to debt are well below Fitch's median ratios for 'BBB' rated continuing care retirement community (CCRCs). However, Fitch believes that VOI has done a good job maintaining cash reserves above 200 days cash on hand while funding over $7 million in physical plant improvements from operations over the past six years. Fitch believes that VOI can continue to grow cash and invest in its physical plant. Additional concerns include a fairly competitive service area with several facilities located in Sarasota, just 10 miles north of VOI. Competitive pressures are tempered by the fact that VOI gets most of its residents from the southern part of Sarasota County where there is little competition. Additional concerns include ongoing capital needs as debt capacity is limited.

The Stable Outlook assumes continued sound operating performance and stable occupancy rates in independent living and assisted living units and improved occupancy in the skilled nursing facility. Fitch expects liquidity to grow slightly over the near term.

VOI operates a type-B CCRC located in Venice, FL approximately 75 miles south of Tampa on Florida's Gulf Coast. The community consists of 214 independent living units, 93 assisted living units, and 64 skilled nursing beds. In the fiscal year ended Dec. 31, 2006, Village on the Isle, Inc. had total revenues of approximately $17.1 million.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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 are also available from the 'Code of Conduct' section of this site.
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Publication:Business Wire
Date:May 24, 2007
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