Bangkok--25 Dec--Standard & Poor's
Standard & Poor's Ratings Services raised its rating to 'AA+' from 'AA' on Fort Irwin Land LLC, Calif.'s taxable class I military housing revenue bonds, series 2005A. Standard & Poor's also affirmed its 'AA' rating on Fort Irwin Land LLC's class II military housing revenue bonds, series 2005A, and its 'A' rating on Fort Irwin Land LLC's class III taxable military housing revenue bonds, series 2005A. The outlook on all ratings is stable.
"The ratings reflect our view of the strong debt service coverage ratios on the bonds, based on net operating income plus capitalized interest and interest earnings," said Standard & Poor's credit analyst Karen Fitzgerald. "Moreover, we believe the bonds' asset quality, which consists of a federally appropriated revenue stream, strong and sustained demand for the privatized housing, fully funded reserves, and the high quality of the real estate collateral supporting the bonds, is very strong."
Audited financial statements for the 2008 fiscal year that ended Dec. 31, 2007, indicate that coverage was what we consider strong at 1.96x for the class I bonds, 1.52x for the class II bonds, and 1.14x for the class III bonds. Year-to-date (YTD) financial statements indicate higher coverage for the current fiscal year, and we project annualized coverage of 2.10x for the class I bonds, 1.63x for the class II bonds, and 1.22x for the class III bonds for fiscal 2009.
In our view, there is strong demand for housing at the project, as evidenced by occupancy of 95.3% for 2008 and average occupancy of 95.2% during 2009. These occupancy levels are slightly above the pro forma levels of 94.5% that project officials had originally projected for 2008 and 2009.
Fort Irwin Land LLC is a joint venture of Clark Realty Capital LLC and Pinnacle Management Inc., which together constitute a 51% partner, and the U.S. Army, which is a 49% partner. The partners made a secured loan to California Military Communities LLC to acquire, build, and/or renovate 3,006 units of military family housing in California. Simultaneous with the issuance of the bonds, the U.S. Department of Defense transferred to the borrower 2,046 units of existing family housing and 120 units of bachelor housing at Fort Irwin in the Mojave Desert, 230 family units at Moffett Federal Airfield in Mountain View, and 13 family units at Parks Reserves Forces Training Area in Dublin. We understand that construction is scheduled for completion in 2012.
RELATED RESEARCH
USPF Criteria: "Military Housing Privatizations," June 14, 2007
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Karen Fitzgerald, San Francisco (1) 415-371-5023
Raymond Kim, New York (1) 212-438-2005