Fitch Ratings of New York has affirmed its “BBB+” rating of bonds issued on behalf of Diakon Lutheran Social Ministries. The affirmation was announced in a news release posted by Fitch.
The rating indicates a “stable” financial outlook for Diakon; further, Fitch issued a “BBB+” rating in preparation for the issuance of $145.5 million of Cumberland County Municipal Authority revenue bonds, series 2015.
The affirmation of the existing Cumberland County Municipal Authority (PA) bonds issued on behalf of Diakon related to $121,260,000 revenue refunding bonds, series 2009, and $61,955,000 revenue bonds series, 2007A.
Proceeds from the series 2015 bonds will be used to refund the 2007A bonds, a portion of the 2009 bonds and pay costs of issuance. Pro forma maximum annual debt service of $16.5 million was provided by the underwriter and is down from the prior maximum annual debt service of $17.5 million.
“This rating and outlook affirm for investors, our staff members, and the people we serve that our operational and financial decisions and strategic direction continue to strengthen Diakon,” said Mark T. Pile, Diakon president/CEO.
According to Fitch’s press release, the affirmation stems from the fact that “Diakon’s financial profile remains stable and is characterized by good debt service coverage, adequate operational performance and liquidity, and solid net entrance fee receipts. In addition, Diakon's debt profile is conservative with approximately 70% fixed-rate debt, adding a further measure of stability at the current rating level.”
The report also cited improving occupancy in Diakon’s senior living accommodations, which improved to 89% in February of this year, compared with 83% in 2010. “The improvement in occupancy reflects the effects of Diakon's strong capital investments, especially at Luther Crest, and revamped marketing efforts across the system over the last few years. Personal care and skilled nursing occupancy remained above 90%, consistent with the three-year historical period,” the Fitch release noted.
Further cited was Diakon senior living communities’ solid 2014 operational and financial performance. The review commended Diakon for its action last year in creating a separate corporation for Diakon’s child and family programs, which resulted in stronger focus on both programmatic groupings.
William Swanger, M.A., APR
Senior Vice President, Corporate Communications
Diakon Lutheran Social Ministries