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Standard & Poor’s Affirms Kendal at Oberlin’s 'A-' Rating

Kendal at Oberlin recently received their 2016 Standard and Poor’s Ratings from S & P Global. Kendal has maintained an ‘A-‘ rating since 2013. Following are excerpts from the rating.

Standard & Poor’s Ratings Services affirmed its ‘A-‘ long term rating on the Lorain County Port Authority, Ohio’s 2013A health care facilities revenue bonds, issued for Kendal at Oberlin, a continuing care retirement community (Life Plan Community). The outlook is stable.

The rating reflects our view of Kendal at Oberlin’s strong balance sheet and strong management team. Kendal has also been able to maintain positive operations, which is somewhat rare in the senior living industry. The management team continues to move forward with its master facility plan, and continues to see success. While management is updating its facilities, the team is still focused on the future of health care. Kendal at Oberlin continues to participate in an accountable care organization, and this will allow it to stay aligned with the local providers of health care.

The Outlook is Stable

The rating further reflects Standard & Poor’s opinion of Kendal at Oberlin’s:

  • Solid liquidity, with more than 870 days’ cash on hand as of as of the unaudited fiscal year  ended Dec. 31, 2016;
  • Solid business position, reflected by consistently high occupancy; and
  • Strong management, supported by an experienced, non-obligated sponsor.

The stable outlook reflects the view of Kendal at Oberlin’s consistent ability to increase its unrestricted reserves amid management’s implementation of its vision for the community of the future. The strategic planning should allow Kendal at Oberlin to continue to build the organization’s liquidity, which will sustain the financial flexibility.

Operations Remain Strong

Kendal at Oberlin’s operations remained positive in fiscal 2016: It is still one of the few senior living organizations that produced a positive operating income. Based on S&P Global Ratings’ calculation of operating income, which excludes investment income and contributions, Kendal is still producing a strong operating margin. For unaudited 2016, Kendal at Oberlin posted an operating margin of 3.1% and added adjusted maximum annual debt service MADS coverage of 2.1x. The management team noted that even though revenue for resident fees was behind budget for unaudited fiscal 2016, its expense base has remained smaller than budgeted. As such it is outpacing the budget for fiscal 2016 from an operating standpoint.

The Community Takes Steps to Ensure Long-term Success

Kendal at Oberlin’s leadership remains very stable. As the team is seasoned, it continues to take steps that it believes will ensure the long-term success of the organization. This can be seen in the continued investment in the long-range master facility plan. As the leadership team has completed four waves of updates to its classic cottages, it continues to make adjustments to the design that are cost efficient and address market needs. This, along with a focus on the expense base, should help Kendal at Oberlin remain successful.

Kendal at Oberlin is predominantly a life care (Type A) facility and is an affiliate of The Kendal Corp., which offers affiliated services to Kendal at Oberlin and 12 other affiliates in the United States. Kendal at Oberlin is located in Oberlin, Ohio, less than one mile from Oberlin College and 35 miles west of Cleveland.