Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Rating Update:

MOODY'S AFFIRMS A1 RATING OF FORT CARSON FAMILY HOUSING, LLC TAXABLE HOUSING REVENUE BONDS SERIES 1999

26 May 2011

APPROXIMATELY $131.4 MILLION OF OUTSTANDING SENIOR DEBT AFFECTED; OUTLOOK IS STABLE

Housing
CO

Opinion

NEW YORK, May 26, 2011 -- Moody's Investors Service has affirmed the A1 rating on approximately $131.4 million of outstanding senior lien (Class I) debt on Fort Carson Family Housing, LLC Taxable Housing Revenue Bonds, Series 1999.

RATING RATIONALE

The affirmation is justified by strong financial and operational performance in 2010, as well as maintenance of well-funded reserves. The stable outlook is supported expectation of continued strong performance in the near term.

The bonds are special obligation of the issuer, secured by a pledge of rental and other revenues (including the Basic Allowance for Housing receipts) generated by Fort Carson Family Housing, LLC, a privatized military housing located in Colorado Springs, CO; assignment of a leasehold mortgage on property, improvements and equipment therein; and Trustee-held reserve funds.

STRENGTHS:

-- Highly essential base

-- Initial Development Period (IDP) has been completed and Project is currently stabilized

-- Average occupancy of 97% in 2010

-- 2.22x debt service coverage in 2010

-- Military Housing Guaranty Agreement with USA (US DOD), under which the USA will cover debt service defaults on the senior bonds (Class I) caused by closure of the Installation, downsizing or net deployment of at least 40% of Installation personnel

-- Utilities are provided by the Army, and are reimbursable from available cash flow after paying debt service on all bonds; thus, Project is not subject to volatility of utility prices

CHALLENGES:

-- Surety agreement (National Public Finance Guaranty Corp., Rated Baa1) only provides for debt service coverage for up 6 months of Maximum Annual Debt Service (MADS).

-- Rental revenue is exposed to volatility in yearly BAH payments, which are subject to Federal budget appropriation risk. Such risk applies to rent levels for incoming tenants who are newly assigned to the base.

-- Ongoing deployments influence high turnover rates of about 45% per year at the Project. This is mitigated by a high ratio of eligible families to housing units, as well as a Project wait list of approx. 1,540 households.

-- As of December 2010, the Project has not posted cash collateral, as required pursuant to downgrade of the surety provider (National Public Finance Guaranty Corp., formerly MBIA, rated Baa1 with a developing outlook); both the bond trustee and the surety provider recently extended a prior waiver on the technical default through April 1, 2014.

DETAILED CREDIT DISCUSSION

PROJECT BACKGROUND

Fort Carson Family Housing is a 3,060-unit privatized military housing development located at the U.S. Army's Fort Carson Base in Colorado Springs, Colorado. The Project was initiated in 1999 under a ground lease with the U.S. Department of Defense. The scope of work was completed in two phases, both of which are complete as of March 2010, for a total of 3,060 end-state units. Phase I, completed in December 2004, involved the renovation of 1,823 existing units acquired under the ground lease, as well as the new construction of 841 units. Phase II, completed in March 2010, involved the new construction of 404 units, as well as the demolition of eight (8) existing units.

Phase I of the Project was financed with proceeds from the Series 1999 (Class I) bonds (rated herein), while Phase II was financed with proceeds from the Series 2006 (Class II and III) subordinate bonds (not rated by Moody's).

The Project is managed by Balfour Beatty Communities (BBC) under a current management agreement. BBC took over management of the Project in November 2003, completing the final portion of Phase I of the Project and all of Phase II. BBC continues to manage the day-to-day operations, and asset and fiscal management of the stabilized development.

REAL ESTATE FUNDAMENTALS REMAINED STRONG IN 2010

In 2010, average occupancy levels at the Project remained strong at 97% of on-line units, an increase over an observed 95% in the prior year. This is driven by the high demand for the Project as evidenced by a high ratio of eligible families to end-state units of approximately 4.7x. Demand is also expected to increase with the anticpated arrival of a new aviation brigade with approximately 1,600 additional eligible families to the base. Rent rates at the Project, which are driven by Department of Defense Basic Allowance for Housing (BAH) levels, have increased for each of the last three years with 2011 displaying a non-weighted average increase of 3.56%. However, rent growth is not guaranteed going forward given the risk inherent in future BAH levels, which are subject to Federal Appropriation. BBC reports that it believes that rents at the Project are at approximately 100% of comparable market rents, which in addition to the Project's advantages, such as its on-base location, helps maintain the Project's competitive market position.

FINANCIAL PERFORMANCE REMAINED STRONG IN 2010

In 2010, the Project achieved a debt service coverage of 2.22x on the senior bonds, a significant increase over the prior year's coverage of 2.03x. This represents the third consecutive yearly increase in coverage, and in 2010 was driven by growth in revenues of 7.7% outpacing growth in expenses of 3.5%, for an overall increase in net operating income of 9.5%

RECENT DEVELOPMENTS

--1.) Status of IDP: Phase II is complete as of March 2010.

--2.) 2010 Expansion: Army provided $98.3M in equity capital to the Project to fund the new construction of an additional 308 units of housing in furtherance of the Grow the Army Initiative. The new assets will be absorbed into the bond trust estate upon stabilized occupancy, which is expected for 2013.

--3.) Turnover rate at approximately 45% per year: 2011 deployments affect approximately 4,800 out of 14,500 current eligible families (related number of occupied units unknown); however, return of other brigades helps maintain balance, dynamic which is very common to the Project.

--4.) Arrival of a new aviation brigade with 2,700 eligible personnel is expected for 2013. Incremental housing need will be met with the next phase of development, currently in early planning stages.

--5.) As of December 2010, the Project has not posted cash collateral, as legally required pursuant to downgrade of the surety provider (National Public Finance Guaranty Corp., formerly MBIA, rated Baa1 with a developing outlook); both the bond trustee and the surety provider recently extended a prior waiver on the technical default through April 1, 2014.

Outlook

The stable outlook on the rating is supported by Moody's expectation that the project will continue to perform well, and make full and timely payments of debt service in the near term.

WHAT COULD CHANGE THE RATING UP?:

- Replacement of the debt service reserve surety with one from a highly rated provider

- Replacement of the debt service surety provider with a cash collateralized account held by the bond trustee

- Substantial and sustained increases in debt service coverage

WHAT COULD CHANGE THE RATING DOWN

- Declines in debt service coverage

- Substantial or prolonged declines in occupancy

- Further downgrade of the rating of the DSRF surety provider

The principal methodology used in this rating was Global Housing Projects published in July 2010.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings and public information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Carlos Calderon
Analyst
Public Finance Group
Moody's Investors Service

Florence Zeman
Backup Analyst
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

MOODY'S AFFIRMS A1 RATING OF FORT CARSON FAMILY HOUSING, LLC TAXABLE HOUSING REVENUE BONDS SERIES 1999
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​
Moodys.com