Fitch Ratings said it has downgraded to BBB-plus from A-minus the rating on the approximately $17 million series 2007 bonds issued by North Carolina Medical Care Commission on behalf of Arbor Acres United Methodist Retirement Community.
The rating outlook is revised to stable from negative.
The bonds are secured by gross revenues, a first mortgage, a security interest in the residency agreements, and a debt service reserve fund.
The downgrade is based on Arbor Acres' continued robust capital spending, which has resulted in liquidity metrics that have not improved in line with Fitch's expectations during the last review. Further, management indicated that there are additional capital projects in the near term, which will likely suppress capital and liquidity metrics over the next few years. At June 30, 2014, unrestricted cash and investments totaled $18.6 million, which equals 299.9 days cash on hand (DCOH), 6.3x cushion ratio and 42.1% cash to debt.
