SAN FRANCISCO, CA--Standard & Poor's Ratings Services assigned its 'BBB-' long-term rating to the Washington State Housing Finance Commission's $52.245 million refunding revenue bonds issued for Wesley Homes Inc.The rating reflects the successful completion and ramp-up of its second long-term care community in Auburn, Wash., high occupancy levels at its Des Moines facilities, solid excess margins and adjusted maximum annual debt service coverage (MADS), and a strong balance sheet. The outlook is stable.
"Wesley Homes reported a good operating margin in fiscal 2006 of 4.3% and a breakeven operating budget for 2008 based upon the successful fill-up at its new Lea Hills facility, and an excess margin of 10.6% in fiscal 2006," said Standard & Poor's credit analyst Keith Dickinson. "Its adjusted MADS coverage of 2.3x for fiscal 2006 is solid."
Offsetting credit factors include a large operating loss for the 11-month interim period (fiscal year end is Dec. 31) due to a $2 million write-off of letter of credit fees paid in 2005, and low unrestricted cash to debt for the rating at 24.4% for fiscal 2006 and 29.2% for the interim period, due to high long-term debt.
The Wesley Homes Inc. obligated group is made up of Wesley Homes, the group's sole corporate member; Wesley Homes Des Moines LLC, which owns and operates Wesley Homes Des Moines, a continuing care retirement community; Wesley Homes Lea Hill LLC, which owns and operates Wesley Homes Lea Hill, a planned retirement community; Wesley Homes Foundation, organized for charitable and education purposes to support Wesley Homes in its endeavors; and Wesley Homes Community Health Services, which provides nursing and other services to residents of Wesley Homes Des Moines and Lea Hill.
Media Contact:
Christopher Mortell , New York, (1) 212-438 3446
Analyst Contacts:
Keith I Dickinson, San Francisco (1) 415-371-5036
Geraldine Poon, San Francisco (1) 415-371-5078
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