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Fitch Ratings assigns 'BBB-' IDR to Odd Fellows Home of California.

Austin: Fitch Ratings, a nationally recognized statistical rating organization (NRSRO) designated by the U.S. Securities and Exchange Commission, assigned a 'BBB-' Issuer Default Rating (IDR) to Odd Fellows Home of California (Odd Fellows). Odd Fellows has a $71 million direct bank loan (series 2016) with Compass Bank and $98.6 million series 2012 Cal Mortgage insured revenue bonds outstanding.

Odd Fellows consists of two continuing care retirement communities (CCRCs): Saratoga Retirement Community in Saratoga, CA and Meadows in Napa, CA. Both are located in favorable service areas that have produced good Independent living unit (ILU) occupancy in the 90% range over the past few years. Health care occupancy has been challenging due to industry pressures in the Medicare short stay business and weaker memory care census due to low internal transfers at the Saratoga campus. Despite these challenges, Odd Fellows was able to produce a 95.7% operating ratio and strong entrance fees contributed to a good 25.4% net operating margin - adjusted (NOMA) in fiscal 2018.

Odd Fellows' financial profile remains favorable for the rating level. Odd Fellows' $81.7 million in unrestricted cash and investments translates into 629 days cash on hand (DCOH), 70.1% cash to debt, and 9.7x cushion ratio, which were stronger than Fitch's 'BBB' category medians of 396, 61.5%, and 8x, respectively. It used maximum annual debt service (MADS) of $8.5 million, which excludes the temporary debt. Total debt after project stabilization is expected to be $90.6 million. MADS was a high 15.4% of fiscal 2018 total revenues as compared to the 'BBB' category median of 12.4% and debt to net available of 6.2x was generally in line with the 'BBB' median of 6.3x. However, debt service coverage was solid at 2.2x in fiscal 2018.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Geographic Code:1U9CA
Date:Oct 26, 2018
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