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.

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