The Rating Outlook is Stable.
The bonds are secured by a pledge of all revenues, first mortgage on all assets, and by a debt service reserve fund.
KEY RATING DRIVERS
SATISFACTORY FINANCIAL PROFILE: Morningside Ministries has a satisfactory financial profile, as evidenced by its solid profitability, consistent historical debt service coverage, and good liquidity. Debt service coverage by revenue only is strong at 1.8x through the six-month interim period (
STRONG OVERALL OCCUPANCY: MM has strong demand for its services, as demonstrated by a 92.2% occupancy average in its independent living units (ILU) over the past four years. Additionally, occupancy in the assisted living units (ALU) is solid averaging 90.7% over the same period.
LARGE CAPITAL PROJECT: Management has moved forward with expansion plans at its Menger campus, which totals approximately
MANAGEABLE DEBT BURDEN: Despite MM's large campus expansion project, maximum annual debt service (MADS) of
RENTAL SERVICE PROVIDER: MM does not rely on turnover entrance fees for debt service coverage as it is a predominately rental continuing care retirement community (CCRC). MM has a long operating history dating back to 1959 with limited competition, which are viewed as primary credit strengths.
EXECUTION OF EXPANSION PROJECT: MM is currently on track with the pre sales of its new ILUs and it is expected that MM will sustain the sales velocity and achieve fill up in a timely manner and reach stabilized occupancy by 2017. The failure to execute on its expansion project would likely result in negative rating pressure.
Morningside Ministries was established in 1959 and began serving seniors in 1961. MM currently operates three senior living communities in the greater
MM at the Meadows (MMM) is comprised of
SATISFACTORY FINANCIAL PROFILE
Through the same period MM earned
STRONG OVERALL OCCUPANCY
LARGE CAPITAL PROJECT
The project is being financed with a
Total initial entrance fees expected from the project is
MANAGEABLE DEBT BURDEN
Fitch views MM's debt profile as manageable with no outstanding swaps. Despite additional debt for the expansion project, the organization's debt burden remains in line with Fitch's 'BBB' category medians. MADS as a percentage of revenue was 11.5% at fiscal 2013 and fell to 10.8% through the six month interim period as a result of continued revenue growth.
MM had an elder abuse incident that was publicized in
Morningside Ministries covenants to provide annual, semiannual and quarterly disclosure through the EMMA system.
Additional information is available at 'www.fitchratings.com'
--'Rating Guidelines for Nonprofit Continuing Care Retirement Communities (
Rating Guidelines for Nonprofit Continuing Care Retirement Communities
Source: Fitch Ratings
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