Fitch Ratings stripped Bethesda Home and Retirement Center of its investment-grade rating, lowering the credit to BB-plus from BBB-minus due to its deteriorating balance sheet in 2008 and 2009. The action affects $2.6 million of bonds issued through the former Illinois Health Facilities Authority. The outlook was revised to stable from negative.

Bethesda has failed to achieve 1.1 times coverage of debt service due to its faltering operating profile. Its fiscal 2008 and 2009 results were driven by weaker occupancy, below budget Medicare census, and sizeable investment losses.

The continuing care retirement community had historically relied on investment income and realized gains to offset operating losses. Over the same period, it was forced to suspend a campus repositioning project that would have added new independent living units.

The CCRC’s liquidity remains solid with 351 days cash on hand, providing a cushion ratio of 15.2 times and cash to debt of 238% as of March 31.

The center has also implemented cost savings and other initiatives focused on improving occupancy and increasing its Medicare census, measures that have helped show an improvement in first quarter 2010 operating results, according to analysts.

Bethesda is a long-term care facility located in the Mont Clare neighborhood on the northwest side of Chicago with total revenue of $6 million last year.

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