Five Series Of Global Ministries Fellowship, TN, Bond Issues Outlook Negative

Stocks and Financial Services Press Releases Thursday May 31, 2018 09:06
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 five series of multifamily affordable housing revenue bonds issued for Global Ministries Fellowship, Tenn., (GMF) a nonprofit corporation that develops and operates affordable housing. The outlook on all issues is negative.

"The rating actions primarily reflect our assessment of the most recent audited financial statements available, for fiscal 2017," said S&P Global Ratings credit analyst Vikas Jhaveri. All properties have exhibited and continue to exhibit signs of both physical and financial decline, particularly in the past two years.

The issues this rating action affect are supported by affordable rental housing properties that do not have project-based Section 8 Housing Assistance Payment (HAP) contracts. The properties that support these issues are affordable housing properties with income restrictions for their tenants. While we understand GMF intends to sell its Section 8 properties, we also understand the organization intends to retain ownership of its affordable housing properties, including this portfolio.

In the case of all of the issues in this report, the eroded financial attributes and lowered assessment of the portfolio's strategy and management to highly vulnerable, our lowest category, warrants the downgrade. The deterioration in cash flows has resulted from a combination of such factors as high vacancy rates, higher-than-expected maintenance and repair expenses, and increasing insurance expenses, among other project specific factors. We downgraded the Chateau Projects series 2009B bonds to 'CCC+', which reflects our view that the series is vulnerable to nonpayment. This is due to debt service coverage falling below 1x for consecutive years and the need for capital infusions from the property owner.

The negative outlook reflects decreased debt service coverage, increased loan-to-value, and our assessment of the GMF portfolio's strategy and management as highly vulnerable.
Should the portfolio's management assessment, asset quality, and financial performance improve, we could raise the ratings.
A further decline in any project's operating performance could lead to a negative rating action.

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