Fitch Ratings said it has downgraded the rating on approximately $35.3 million series 2010A and B bonds issued by the city of Alhambra, Calif., on behalf of Atherton Baptist Homes to B-plus from BB.
The rating outlook is revised to stable from negative.
The bonds are secured by gross revenue pledge, mortgage, and debt service reserve fund.
The rating downgrade reflects Atherton's continued weak financial performance, which was the result of ongoing challenges with occupancy in 2012 (Dec. 31 year end; unaudited interim financials). Atherton's financial profile is characterized by low liquidity, poor profitability and inability to meet debt service coverage. In addition, there is concern with Atherton's ability to reach stabilization on its Courtyard project (50 independent living unit (ILU) expansion that opened in June 2011), which will pressure Atherton to meet its bond covenant calculations, which are required to be met beginning in fiscal 2014.
