NEW YORK--()--Fitch Ratings has affirmed the following two multifamily project bonds supported by Florida Housing Finance Corporation's affordable housing guarantee fund (the fund; GF) at 'A-' and removed the rating from Rating Watch Negative:
-Lee County Housing Finance Authority (FL) (Andros Isle Apartments Project) multifamily housing revenue bonds series 2001 A & B;
-Florida Housing Finance Corp. (FL) (The Villas at Lake Smart) multifamily mortgage revenue bonds series 2002 P-1.
A Stable Rating Outlook has been assigned.
GUARANTEE FUND RATING: The bonds' ratings are primarily tied to the rating of the Guarantee Fund (currently rated 'A-'; Stable Outlook by Fitch) given that the GF insures the project mortgage amounts. The bonds' ratings will reflect all changes to the GF rating.
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 has been removed from Rating Watch Negative and the bond rating is affirmed for the Andros Isle development based on the current asset parity ratio. As mentioned, the development was awaiting approval from the Florida Housing board for an extension of the SAIL ELI loan closing date. The board decided not to grant the extension, and Fitch therefore reviewed the trust assets and is affirming the rating based on the fact that the current asset parity level is commensurate with its rating level.
The rating has been removed from Rating Watch Negative and the bond rating is affirmed for The Villas at Lake Smart development following Fitch's review of the revised cash flows from the SAIL ELI loan modification and corresponding bond redemption. The revised cash flows maintain an asset parity ratio above 101% for the remaining term of the bonds.
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. 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)