The rating on debt issued by a
continuing care retirement
community in Cleveland was lowered to
BB from BBB last week by Fitch
Investors Service. The rating agency
cited poor operating performance
and a deteriorated cash position.
The rating action affected $28.5
million of outstanding revenue
bonds issued through Cuyahoga
County for Judson Retirement
Community. In addition, Fitch revised
the credit trend on the debt to
declining from stable.
Fred Martucci, a managing
director at Fitch, said that Judson's
weakened financial position stemmed
from unexpected vacancies in the
retirement community's independent
living units and slower than
anticipated occupancy of the assisted
living units.
Martucci said that Judson's
management intends to realign its mix of
500 units to respond to market
demands. He said that the retirement
center plans to decrease the number
of independent living units and
increase the amount of assisted care
and nursing home units. Judson
officials did not return phone calls.
In a press release, Fitch said that
future rating actions will depend on
the retirement community's ability
to boost occupancy rates through the
realignment.
"This should result in improved
coverage and cash accumulation,"
Fitch said.
Fitch released a report last month
that said demand for living units is
the most important factor in
assessing the credit quality of a nonprofit
retirement center.