NEW YORK--()--Fitch Ratings maintains the Rating Watch Negative on the following two multifamily project bonds supported by Florida Housing Finance Corporation's affordable housing guarantee fund (Guarantee Fund):
--Florida Housing Finance Corp. (FL) (Logan's Pointe Apartments Project) housing revenue bonds series 1999F-1 & F-2 'A-';
--Florida Housing Finance Corp. (FL) (Peacock Run Apartments) multifamily mortgage revenue bonds series 2002 H-1 & H-2 'A-';
SUFFICIENT ASSET PARITY: The Rating Watch Negative is tied to the potential for changes in the asset parity ratio for each respective development following possible upcoming loan amendments and debt restructuring. A typical single asset multifamily transaction with a mortgage guarantee maintains an asset parity ratio of no less than 101% throughout the term of the bonds.
The two above-mentioned bond series were placed on Rating Watch Negative in July 2012 because the developments were approved to receive the second round of funding under the State Apartment Incentive Loan Funding for Extremely Low-Income (SAIL ELI) program. The intent of the program is to provide funds to allow recipients to redeem a portion of the bonds and restructure the respective mortgage note.
The Rating Watch Negative is being maintained on the Logan's Pointe bond series pending refinancing, anticipated to occur by the end of the first quarter of 2013. Though the development was awarded SAIL ELI funding, at this point Fitch has not received cash flows demonstrating the loan amendment and bond restructuring. The development is expected to instead refinance out of the portfolio through a U.S. Department of Housing and Urban Development (HUD) refinancing program. If the refinancing does not occur and the loan is amended, Fitch will review cash flows and the revised asset parity ratio during the process of restructuring.
The Rating Watch Negative is being maintained on the Peacock Run bond series because the SAIL ELI loan closing, originally anticipated for the fourth quarter of 2012, received Florida Housing board approval for an extension until September 1, 2013. Therefore, the loan and bond amounts are expected to be amended over the next six months. Fitch will continue to monitor the progress of the restructuring.
Part of Fitch's surveillance review for single asset multifamily bond issuances with a mortgage guarantee involves an asset parity test to confirm that available assets would exceed bond liabilities in the case of a mortgage default. The asset parity is calculated by dividing the dollar amount of total program pledged assets (which includes the guaranteed mortgage and amounts on deposit in reserves) by the total amount of bonds outstanding. As mentioned above, a typical single asset multifamily transaction with a mortgage guarantee maintains an asset parity ratio of no less than 101% throughout the term of the bonds. For more information regarding Fitch's rating analysis for single asset multifamily transactions backed by a mortgage guarantee, please see the press release 'Fitch Affirms 51 MF Project Bonds Supported by FL Hsg Guarantee Fund at 'A-'; Outlook Stable' dated July 11, 2012, and available at www.fitchratings.com.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Revenue-Supported Rating Criteria' (June 12, 2012)
Applicable Criteria and Related Research
Revenue-Supported Rating Criteria