SAN FRANCISCO--(BUSINESS WIRE)--Fitch Ratings has assigned an 'A+' rating to the following bonds for Collier County, FL Health Facilities Authority (issued on behalf of The Moorings Incorporated):
--$70 million series 2015A bonds.
The Moorings Incorporated (Moorings) also plans on issuing series 2015B and C bonds, which will be a direct bank loan with Banc of America. The series 2015A-C bond proceeds will be used to refund all outstanding debt. Proceeds will also be used to pay a portion of the development/ acquisition costs related to the Moorings Park at Grey Oaks project (MPGO), and pay associated costs of issuance. The pro forma debt structure will be approximately 50% traditional fixed-rate bonds and 50% variable-rate debt. The direct bank loan with Banc of America will be at a variable rate for an initial 10-year term.
Additionally, Fitch has affirmed the 'A+' rating on approximately $70 million of currently outstanding series 2000, 2005, and 2008 bonds. All three series of bonds (2000, 2005, and 2008) are backed by direct pay letters of credit (LOCs) from JPMorgan Chase Bank (JPMorgan; rated 'A+/F1'; Stable Outlook by Fitch). The respective LOCs all expire in April 2018.
The Rating Outlook is Stable.
SECURITY
The bonds are secured by a gross revenue pledge and mortgage pledge.
KEY RATING DRIVERS
EXCELLENT FINANCIAL PERFORMANCE: Moorings' excellent financial profile continues to be highlighted by a strong liquidity position, consistent operating profitability, and solid levels of pro forma debt service coverage.
STRONG DEMAND FOR SERVICES: Independent living unit (ILU) occupancy is at an all-time high of nearly 100% occupied (Dec. 31; unaudited), which was up from fiscal 2011's 92%. Overall, Fitch views Moorings' strong demand for services as a primary credit strength that helps sustain its excellent financial profile.
MOORINGS PARK AT GREY OAKS CAPITAL PROJECT: Moorings is currently in process of developing a new community, MPGO, approximately four miles from its current campus. The capital improvement plan calls for the project to be built in four phases consisting of 96 ILUs in Phases I-III and 14 assisted living units (ALUs), 13 ILUs and 24 memory support units in Phase V with final construction completion and fill-up expected by 2017. To date, 95 of 96 ILUs are presold with deposits of 50% of the entrance fee, which Fitch views favorably.
FAVORABLE SERVICE AREA CHARACTERISTICS: Moorings has a long operating history of serving a niche market of affluent residents in Naples, Florida dating back to 1981. Naples, FL. is viewed as a retirement destination, which enables Moorings Park to draw residents from beyond its local area. In addition, the MPGO project is expanding the Moorings' traditional resident draw with a different demographic profile related to the MPGO project.
RATING SENSITIVITIES
MOORINGS PARK AT GREY OAKS SUCCESSFUL COMPLETION: As Moorings continues with its strategic and capital improvement plan to development its MPGO community Fitch will monitor for successful construction completion and fill-up of each phase. Fitch would view unfavorably any significant construction delay and/or cost overrun that impacts Moorings.
CREDIT PROFILE
ORGANIZATIONAL OVERVIEW
Moorings Park is a type-A continuing care retirement community located in Naples, FL. The community consists of 384 independent living units, 73 assisted living units, and 106 skilled nursing beds. In the year ended Dec. 31, 2014 (unaudited), Moorings Park had total revenues of approximately $68.9 million. Moorings Park covenants to provide annual and quarterly financial statements to bondholders.
RATING ASSIGNMENT OF 'A+'
The 'A+' rating is supported by Moorings' excellent financial profile and strong demand for services. At Dec. 31, 2014, Moorings Park had $177.4 million in unrestricted cash and investments, which equated to 1,340 days cash on hand, 23.7x pro forma cushion ratio, and 130.6% cash to debt. These metrics compare favorably to Fitch's 'A' category medians of 692 days, 15.8x, and 127.2%, respectively. Additionally, these metrics already assume issuance of $45 million of series 2015 bonds to fund the MPGO project. Fitch used pro forma maximum annual debt service (MADS) of $7.5 million in its calculation compared to existing MADS of approximately $5.5 million.
In fiscal 2014, Moorings recorded $5.3 million in operating income, a 94.4% operating ratio and net operating margin-adjusted of 24.1% which is consistent with historical performance. The organization's solid profitability along with improved occupancy results in good pro forma debt service coverage of 3.8x (consistent with Fitch's median of 3.7x). The strong financial performance continues to be driven by Moorings' long history in the market place of providing lifecare services to a very affluent population base. Over the past five years, occupancy has been solid averaging 95% in ILUs, 92% in assisted living units (ALU), and 93% in skilled nursing.
MOORINGS PARK AT GREY OAKS
Moorings Park at Grey Oaks will consist of 96 new ILUs built in three separate 32-unit phases with final completion in 2017. Additionally, Phase IV of the project will consist of 13 ILUs, 14 ALUs, 24 memory support units, a clubhouse, and other various amenities for the new community. Thus far, the project is nearly 100% presold, on budget, and ahead of schedule. Additionally, the development and construction costs have been funded by a local real estate developer with the Moorings responsible for marketing costs.
Upon the completion and fill-up of each phase, Moorings Park will become the owner of the new unit expansion. Series 2015 bond proceeds will be used to pay a portion of the acquisition cost from the developer. The total cost of the project is $169 million with $45 million funded from the series 2015 bond issue. The initial entrance fee pool ($149 million) will fund the remaining cost of the project and the excess amount ($25 million) is expected to be added to unrestricted cash and investments.
Additional information is available in Fitch's Feb. 12 press release, 'Fitch Affirms Moorings Park (FL) Bonds at 'A+'; Outlook Stable', available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'
Applicable Criteria and Related Research:
--'Revenue-Supported Rating Criteria' (June 16, 2014);
--'Not-for-Profit Continuing Care Retirement Communities Rating Criteria' (July 2014).
Applicable Criteria and Related Research:
Not-for-Profit Continuing Care Retirement Communities Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=752470
Revenue-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750012
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=980523
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