Fitch Affirms Westminster Manor, TX's Rev Bonds at 'BBB'; Outlook Stable.

ENPNewswire-May 20, 2022--Fitch Affirms Westminster Manor, TX's Rev Bonds at 'BBB'; Outlook Stable

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Release date- 19052022 - Fitch Ratings has affirmed its 'BBB' Issuer Default Rating (IDR) rating to Westminster Manor and affirmed its 'BBB' ratings on the bonds issued by the New Hope Cultural Education Facilities Finance Corporation on behalf of Westminster Manor.

The Rating Outlook is Stable.

SECURITY

The bonds are secured by a pledge of gross revenues and a mortgage lien on property. Aggregate maximum annual debt service (MADS) is approximately $7 million.

ANALYTICAL CONCLUSION

The 'BBB' rating is supported by Westminster Manor's favorable location and reputation in the Austin market. The rating also reflects a midrange operating risk assessment that incorporates the community's consistently solid operations and cash flow level as well as an elevated debt burden associated with an ongoing expansion project. The expansion will add 61 new independent living units (ILUs), 36 new assisted living units (ALUs) and 38 memory care units (MCUs).

Westminster Manor completed phase one in April on schedule, completing 18 apartments and filling eight. Demand for the new expansion ILUs is robust with reservations secured for 100% of the new units. Furthermore, Westminster Manor's project contractor pre-purchased majority the of materials associated with the expansion project early in the pandemic, which in Fitch's view mitigates the risk of construction cost overruns. Westminster Manor will utilize the same contractor for all phases of the project.

The Stable Outlook anticipates a successful completion and fill of new ILUs from Westminster Manor's capital expansion project both on time and on budget. Fitch expects Westminster Manor's key leverage and operational metrics to be soft during construction, but the project should grow core operating profitability and successful fill-up should provide improvement in its key financial metrics upon stabilization.

KEY RATING DRIVERS

Revenue Defensibility: 'a'

Strong Market Position

Westminster Manor's rating is supported by the community's favorable location and reputation in the Austin market, and competition is limited with only one comparable community located in its primary market area. Demand continues to be strong with ILU, ALU and skilled nursing facility (SNF) occupancies averaging 95%, 93% and 91%, respectively, over the last five years. Westminster...

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