Fitch Ratings – Austin – 24 Feb 2023: Fitch Ratings has affirmed the ‘A’ rating on the series 2016 revenue bonds issued by North Carolina Medical Care Commission on behalf of Deerfield Episcopal Retirement Community (Deerfield). In addition, Fitch has affirmed Deerfield’s Issuer Default Rating (IDR) at ‘A’.
Deerfield is one of only 15 CCRCs in the country to be A rated by Fitch.
The Rating Outlook is Stable.
Deerfield continues to demonstrate strong, consistent balance sheet and profitability metrics that are sufficient or strong relative to its current rating level. The community’s desirable location and attractive pricing result in robust demand from prospective residents both within and outside the State of North Carolina. Occupancy for the independent living units (ILUs) continues to trend near 100% each fiscal year and to account for roughly 75% of Deerfield’s total units.
Like many other life plan communities (LPCs), Deerfield’s expenses have increased due to rising costs related to labor, supplies and other expenses. In response it has implemented strategies that Fitch believes will help to offset the rising expense base. The strategies primarily target rising labor, but Deerfield was also able to implement a rate increase.
Deerfield is currently reevaluating an expansion plan that could add 114 ILUs. It placed the plan on hold in mid-2022 due to rising construction expenses but still views the project as vital to its strategic plans. Fitch believes that Deerfield will be prudent in its spending when the project resumes and for future debt issuances. Deerfield’s balance sheet could support the current rating even after a debt issuance, but its capacity is not unlimited.