TEXT-Fitch affirms Moorings Park, Fla. bonds at 'A+'

Tue Feb 12, 2013 3:06pm EST

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Feb 12 - Fitch Ratings has affirmed the following Collier County, FL Health
Facilities Authority bonds issued on behalf of The Moorings Park (Moorings Park)
at 'A+':
     
--$11.8 million series 2000 bonds; 
--$27 million series 2005 bonds; 
--$34.8 million series 2008 bonds.
     
The Rating Outlook is Stable.
     
All three series of bonds are backed by direct pay letters of credit (LOCs) from
JPMorgan Chase Bank (JPMorgan; rated 'A+/F1'; Stable Outlook by Fitch). The
respective LOCs expire in 2014 and/or 2016.
     
SECURITY 
The bonds are secured by a gross revenue pledge and mortgage pledge.
     
KEY RATING DRIVERS
     
EXCELLENT FINANCIAL PERFORMANCE: Moorings Park's excellent financial profile is
highlighted by a strong liquidity position, consistent operating profitability,
and robust debt service coverage metrics.
     
SOLID HISTORICAL OCCUPANCY: Independent living unit (ILU) occupancy reached a
five-year high at 94.3% in fiscal 2012 (Dec. 31; unaudited), which was up from
fiscal 2011's 91.6% despite the addition of 29 units. Overall, Fitch views
Moorings Park's solid demand for services as a primary credit strength that
helps sustain its excellent financial profile.
     
CAPITAL PROJECTS: In fiscal 2012, management completed its 29 independent living
unit expansion, additional parking, and wellness center project on-time and
on-budget. Management is now embarking on a new independent living campus
project (totaling 96 ILUs built in three phases) four miles from Moorings Park's
main campus with limited financial risk and upfront cost to the organization,
which Fitch views favorably.
     
FAVORABLE SERVICE AREA CHARACTERISTICS: Moorings Park has a long operating
history of serving a niche market of affluent residents in Naples, FL dating
back to 1981. Additionally, Naples, FL. is viewed as a retirement destination,
which enables Moorings Park to draw residents from beyond its local area.
     
RATING SENSITIVITIES
     
POSITIVE RATING MOVEMENT UNLIKELY: Despite Moorings Park's excellent financial
profile, positive rating movement is unlikely given its exposure as a
single-site community.
     
CREDIT PROFILE
     
RATING AFFIRMATION OF 'A+'
The rating affirmation of 'A+' is supported by Moorings Park's excellent
financial profile and solid demand for services located in Naples, FL. In fiscal
2012 (unaudited), Moorings Park had $151.8 million in unrestricted cash and
investments, which equated to 1,230.5 days cash on hand, 27x cushion ratio, and
154.5% cash to debt. These metrics compared favorably against Fitch's 'A'
category medians of 494.8 days, 14.4x, and 120.2%, respectively. However, Fitch
views Moorings Park's strong unrestricted liquidity position as necessary given
its aggressive debt profile.
     
Through the same period, Moorings Park recorded $6 million in operating income,
which led to a 97.7% operating ratio and 36.8% net operating margin-adjusted and
marked another year of solid, consistent profitability. The organization's good
profitability along with enhanced occupancy generated robust debt service
coverage (turnover entrance fees only) of 5.9x, which compared favorably against
Fitch's median of 2.7x. The strong financial performance continues to be driven
by Moorings Park's 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 91.6% in ILUs, 95% in assisted living units (ALU), and
91.2% in skilled nursing.
     
In October 2012, Moorings Park opened its new 29 ILU expansion project with no
interruptions, which Fitch views favorably. Management is now undertaking plans
for a new campus project, Moorings Park at Grey Oaks (Grey Oaks), which will
consist of 96 new ILUs built in three separate 32-unit phases over three years.
Management will only move forward with the second and third 32-unit phases if
each preceding phase is successful. The project will be funded entirely by a
local real estate developer and Moorings Park will only be responsible for
marketing costs. During each construction phase, Moorings Park will have a goal
of reaching 80% presales (26 units) before beginning construction. After
successful fill-up of each unit phase, Moorings Park will become the owner of
the new unit expansion with no associated debt. If the ILU expansion is
successful, management will consider adding an assisted living/memory care space
consisting of 16 ALUs and 48 memory support units. There could be additional
debt associated with this project; however, since this project is very
preliminary, Fitch will evaluate the capital plans and the impact to the rating,
if any, when the plans are finalized.
     
STABLE RATING OUTLOOK 
The Stable Rating Outlook reflects Fitch's expectation that Moorings Park will
maintain its excellent financial profile and solid occupancy levels while
embarking on the Grey Oaks project, which should have limited financial
downside. 
    
OUTSTANDING DEBT PROFILE 
Total outstanding debt was $98.2 million as of Dec. 31, 2012. Fitch views
Moorings Park's debt profile as aggressive with nearly 75% of outstanding debt
in variable-rate demand bonds (VRDBs). Moorings Park's series 2000, 2005, and
2008 bonds are backed by JPMorgan LOCs and the organization also has a $24.7
million direct bank loan with JPMorgan with an initial term till 2020. Moorings
Park has one floating- to fixed-rate swap for a notional amount of $28.7 million
and there are no collateral requirements. Overall, Fitch believes Moorings
Park's debt profile exposes the organization to counterparty, put, remarketing,
and interest rate risk. However, Fitch believes Moorings Park's strong balance
sheet mitigates this concern.
     
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, 2012
(unaudited), Moorings Park had total revenues of approximately $62.8 million.
Moorings Park covenants to provide annual and quarterly financial statements to
bondholders. 

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.
'Not-for-Profit Continuing Care Retirement Communities Rating Criteria', July
12, 2012.
Applicable Criteria and Related Research: 
Not-for-Profit Continuing Care Retirement Communities Rating Criteria
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