Fourteen Series Of Global Ministries Fellowship, TN, Bonds Outlook Negative

Stocks and Financial Services Press Releases Thursday May 31, 2018 09:02
NEW YORK--31 May--S&P Global Ratings

NEW YORK (S&P Global Ratings) May 30, 2018--S&P Global Ratings has lowered its ratings on 14 multifamily affordable housing revenue bonds issued on behalf of Global Ministries Fellowship (GMF), Tenn., a nonprofit corporation that develops and operates affordable housing. The outlook is negative.

This rating action primarily reflects our assessment of the most recent audited financial statements available (fiscal 2017) and Real Estate Assessment Center (REAC) scores issued by the U.S. Department of Housing and Urban Development (HUD). "Many of the credits in this portfolio show signs of continued decline in either their financial or physical condition or both, which ratings deterioration, particularly in the past two years, reflects," said S&P Global Ratings credit analyst Vikas Jhaveri.

In the case of all 14 properties, the erosion of financial or physical attributes warrants a downgrade. For example, the net cash flow in some properties is insufficient to cover debt service obligations. The deteriorating cash flows has resulted from high vacancy rates, higher-than-expected maintenance and repair costs, and increasing insurance expenses, among other project-specific factors. The physical condition deterioration is demonstrated by significant decreases in year-to-year REAC scores. We downgraded eight of the 14 properties to 'CCC+', reflecting our view that they are vulnerable to nonpayment. This is due to debt service coverage falling below 1.0x for consecutive years and that certain properties have required capital infusions from the property owner.

The negative outlook reflects the properties' deteriorating financial or physical condition demonstrated by debt service coverage decreases, loan-to-value increases, and lower REAC scores.
Should our assessment of the portfolio's management, asset quality, or financial performance improve, we could raise the ratings.
A loss of Section 8 HAP funding could cause a negative rating action or a withdrawal of the ratings.

Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at for further information. Complete ratings information is available to subscribers of RatingsDirect at All ratings affected by this rating action can be found on S&P Global Ratings' public website at Use the Ratings search box located in the left column.

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