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Fitch Ratings affirms 'BBB-' rating on Kentwood Economic Development Corporation revenue bonds.

Chicago: Fitch Ratings, a nationally recognized statistical rating organization (NRSRO) designated by the U.S. Securities and Exchange Commission, affirmed the 'BBB-' rating on the following revenue bonds issued by the Kentwood Economic Development Corporation and Michigan Strategic Fund on behalf of the Holland Home Obligated Group (HH).

These are as follows:--$30.2 million fixed rate limited obligation refunding revenue bonds, series 2016; --$8.8 million fixed rate limited obligation revenue bonds, series 2016; and --$49.7 million fixed rate limited obligation refunding revenue bonds, series 2012.

Debt payments are secured by a revenue pledge of the obligated group (OG), a first mortgage lien on certain property, and a debt service reserve fund (DSRF). Current OG members include the Holland Home corporate parent, the HH Foundation, and all three senior living campuses (Fulton, Raybrook, and Breton Woods).

The service area is generally favorable. Population growth is above average and property values are increasing. Competition for senior living is present in the broader Grand Rapids area but HH maintains a long waitlist suggesting health demand. HH's track-record of operating ratio is modest (107% in fiscal 2017), although net operating margin (NOM) - adjusted is more adequate (13.9% in 2017) and NOM - adjusted is improving in interim fiscal 2018. Liquidity remains light for an investment grade continuing care retirement community (CCRC), although cash on hand has improved (roughly 240 days at fiscal year-end 2017) while cash-to-debt has held steady (36.5%). Maximum annual debt service (MADS) coverage of 1.7x in interim 2018 is adequate. Occupancy rates for independent living units (ILUs) remain high.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Date:Dec 28, 2018
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