OREANDA-NEWS. Fitch Ratings has affirmed the rating on the following bonds issued on behalf of Springpoint Senior Living 1998 Obligated Group (Springpoint OG) at 'BBB+'.

-\\$7.4 million New Jersey Economic Development Authority (NJ) (Springpoint Senior Living 1998 Obligated Group) revenue bonds series 1998A.

The Rating Outlook is Stable.

SECURITY
The bonds are secured by a pledge of gross receipts and mortgage on all property of the Springpoint OG.

KEY RATING DRIVERS
STABLE FINANCIAL PROFILE: The Springpoint OG financial performance has remained largely stable over the last four audited years. In fiscal 2014, Springpoint OG posted a 94.6% operating ratio, a 15.2% net operating margin-adjusted, and debt service coverage of 2.5x. All these were improved year over year, but were helped by approximately \\$1.1 million in one-time insurance payments for hurricane Sandy-related expenses.

GOOD OCCUPANCY: Independent living unit (ILU) occupancy climbed above 80% in fiscal 2012, where it has remained, standing at a solid 87% (based on 810 available units) at June 30, 2015. The consistent occupancy has contributed to the stable operating profile. Assisted living unit (ALU) occupancy has been above 90% through the same period and skilled nursing unit occupancy has fallen below 90% and was 84% at June 30, 2015.

MANAGEABLE DEBT BURDEN: A key credit strength at the current rating level is Springpoint OG's light debt burden, as evidenced by maximum annual debt service (MADS) as a percent of revenue of 7.2% at the six-month 2015 interim ended June 30, 2015, compared to Fitch's 'BBB' category median of 12.3%. Springpoint OG's liquidity relative to debt also compares well to Fitch's 'BBB' medians.

OTHER CREDIT STRENGTHS: The Springpoint OG is the largest non-for-profit senior living provider in New Jersey, with three separate campuses, a revenue base of over \\$75 million, and more than 1,000 total ILU, ALU and skilled nursing units in service. In addition, Fitch views the organization's 100-year operating history in New Jersey as a credit positive. Both its size and operating history help offset credit concerns regarding the Springpoint OG's thinner operating performance, which has generally been below Fitch's 'BBB' category medians.

RATING SENSITIVITIES

MAINTENANCE OF CURRENT PERFORMANCE: Fitch expects Springpoint Senior Living 1998 Obligated Group to continue its consistent operating performance which should support stable debt service coverage. A strengthening of most financial ratios would be required for consideration of a positive rating, and a sustained period of lower performance and lower liquidity would likely result in negative rating pressure.

CREDIT PROFILE
The Springpoint OG consists of three continuing care retirement communities (CCRCs: Meadow Lakes, with 261 ILUs, 28 ALUs, 16 dementia units and 60 nursing beds; Monroe Village, with 287 ILUs, 28 ALUs, and 60 nursing beds; and Crestwood Manor, with 294 ILUs and 64 nursing beds. The Springpoint Foundation and a management company are also part of the OG. In fiscal 2014, the Springpoint OG had total operating revenue of \\$75.6 million.

STABLE FINANCIAL PROFILE
Springpoint OG's financial profile has remained consistent over the last four audited years. From 2011 to 2014, Springpoint OG's operating ratio averaged 98% and its net operating margin-adjusted averaged 9.2%, relative to Fitch's respective 'BBB' category medians of 97.4% and 20.4%. Debt service coverage by turnover entrance fees over this period ranged from 1.3x to 2.5x, relative to a median of 1.9x. Even though most of its operating metrics are below Fitch's 'BBB' category medians, Fitch believes Springpoint OG's size, seasoned management team, and operational longevity provide for a stable performance that helps mitigate some of the concerns of the thinner financial performance.

Six-month 2015 interim period results show continued stability, with an operating ratio of 96.6%, net operating margin-adjusted at 13.8%, and coverage at 2.6x. Revenue-only debt service coverage was solid as well at 1.5x. The Springpoint OG's revenue-only coverage is a credit strength and has remained at, or above, the Fitch 'BBB' median of 0.9x through the four-year historical period.

Liquidity has remained very stable over the last four years and through the interim period. At June 30, 2015, the Springpoint OG had \\$51 million in unrestricted cash and investments, which equated to 259 days cash on hand (DCOH), an 8.5x cushion ratio, and 68.2% cash to debt. DCOH trailed the category medians, but both cash-to-debt and cushion ratio compare well to the category medians, further indications of a manageable debt burden.

Good Occupancy

ILU occupancy was a solid 87% at June 30, 2015. After falling below 80% in 2011, ILU occupancy has steadily improved, providing a lift to operations, which have improved since 2011. Crestwood Manor historically had the softest occupancy in the OG, mostly due to one building which is located on the edge of that campus.

However, Springpoint is pursuing a strategy that would leverage available government funds to convert the building into subsidized housing. Fitch views the strategy as a positive step in addressing the challenges at that building. Crestwood Manor's ILU occupancy, not including that one building, is a solid 87%.

Debt/Capital Spending Profile
Fitch views the Springpoint OG's manageable debt burden as a key credit strength at the current rating level. MADS as a percent of revenue of 7.2% and debt-to-net available of 4.6x at June 30, 2015 are better than Fitch's respective 'BBB' medians of 12.6 and 6.3x. The manageable debt burden eases the pressure on the Springpoint OG's operations.

Fitch views Springpoint OG's overall debt structure as aggressive for the rating category, with approximately 87.7% of its \\$74.7 million in long-term variable-rate debt. The variable-rate bonds are all privately placed, with put dates in July and November 2018. The Springpoint OG has two variable-to-fixed-rate swaps, with a notional value of \\$66.8 million, which hedge the variable-rate debt exposure. The mark-to-market on the swaps was a negative \\$2.5 million at June 30, 2015. The swaps are with two separate counterparties and there are no collateral posting requirements.

Springpoint OG's capital spending has averaged approximately 80.7% of depreciation over the last four years. This figure is slightly above the category median, and Fitch expects this level of spending to continue, with spending mostly for routine capital projects and apartment refurbishing. Springpoint's average age of plant is slightly elevated at 14.6 years.

The organization is moving forward on an approximately \\$25 million skilled nursing expansion on its Monroe Campus. The project will be a new, freestanding building that will be financed outside the Springpoint OG.

Non-OG Update
Outside the OG, Springpoint owns three other CCRCs, as well as 18 affordable housing projects. The Springpoint OG continues to provide a guarantee of up to \\$5 million for the Atrium at Navesink Harbor, one of the non-OG sites, for the life of bonds that are associated with the funding of an expansion project on that campus. The new building at Atrium continues to fill, with ILU occupancy at 85%, and six units left to be sold.

Historically, the Springpoint OG has transferred funds or provided loan guarantees to non-obligated group affiliates; this has been scaled back in recent years. Fitch continues to monitor the level of support to non-obligated group entities and the impact on the OG's performance.

Dislcosure
The Springpoint OG provides quarterly utilization and financial information to bondholders upon request.