TEXT-Fitch affirms O'Connor Woods, Calif. bonds at 'BBB-'

July 9 - Fitch Ratings has affirmed the 'BBB-' rating on the following bonds
issued on behalf of O'Connor Woods (OCW), California:

--$9.1 million City of Stockton revenue bonds (O'Connor Woods Housing
Corporation) series 2001A;
--$30.6 million ABAG Finance Authority for Nonprofit Corporations certificates
of participation (O'Connor Woods Obligated Group) (1999)*.

* The bonds are insured by ACA, which is not rated by Fitch.

The Rating Outlook is Stable.

SECURITY

The bonds are secured by a gross revenue pledge, first priority lien on property
plant and equipment and a debt service reserve fund. The bond payments on the
series 2001A bonds from O'Connor Woods to the Master Trustee will not be
interrupted by the City of
Stockton bankruptcy filing.

KEY RATING DRIVERS

SOLID OPERATING PROFITABILITY: OCW's profitability metrics are solid for the
rating category, which is expected for a rental facility. Operating ratio of
88.5% and operating margin of 3.3% in fiscal 2011 (Dec. 31 year end) have
improved since fiscal 2008 to 96% and negative 4.4%, respectively. Good
operating performance over the last few years can be attributed to cost control
measures and also an increase in skilled nursing facility Medicare-licensed
beds, which allow for rehab short-stays.

WEAK LIQUIDITY: As of March 31, 2012, OCW had $11.3 million in unrestricted cash
and investments, equating to a weak 178.3 days cash on hand (DCOH), 29.4% cash
to debt and 3.1x cushion ratio compared to Fitch's respective 'BBB' medians of
361.4 DCOH and 51% and 5.9x. Since OCW is a rental-only facility, Fitch believes
that this level of liquidity remains adequate for the current rating.

ADEQUATE DEBT SERVICE COVERAGE: Maximum annual debt service (MADS) coverage has
been adequate at 1.5x over the last two fiscal years. OCW plans to refinance its
outstanding debt through the Housing and Urban Development (HUD) 232 financing
program within the next two to three months.

STABLE OCCUPANCY: Although occupancy in the independent living units (ILUs)
remains below historical highs, it has been relatively stable at 87% in fiscal
2011 and 84.5% through the three months ended March 31, 2012. OCW has hired
Pacific Retirement Services for onsite marketing support and training. Occupancy
in assisted living units (ALUs) and the skilled nursing facility (SNF) has
remained strong at 98.5% and 92%, respectively, in fiscal 2011.

CREDIT PROFILE

OCW is in the process of securing a final commitment from the HUD 232 program to
refinance its outstanding debt, which would then close within three months of
the signed commitment. Fitch views this refinancing favorably as OCW would
realize interest savings as well as allow the organization to issue additional
debt through HUD for the construction of a dementia/memory care unit. Fitch will
withdraw its rating once the bonds are refinanced.

Located in Stockton, CA, OCW is a rental retirement community with 245 ILUs, 77
ALUs, and 100 SNF beds. In 2011, OCW reported $26.3 million in total operating
revenue. O'Connor Woods covenants to provide annual and quarterly disclosure
through the Municipal Securities Rulemaking Board's EMMA system.

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', dated June 12, 2012;
--'Rating Guidelines for NonProfit Continuing Care Retirement Communities',
dated July 26, 2011.

Applicable Criteria and Related Research:
Rating Guidelines for Nonprofit Continuing Care Retirement Communities
Revenue-Supported Rating Criteria