S&P Global Ratings' U.S. Public Finance Housing rating actions for third-quarter 2023 consisted of 16 positive rating actions, four negative rating actions, and 60 affirmations.
Third-Quarter Rating Actions
We took positive rating actions on 16 individual ratings: 11 upgrades, one with a positive outlook, and five outlook revisions, consisting of four to stable from negative and one to positive from stable (table 1).
The upgrades on two community development finance institutions reflected improved capital adequacy. Our upgrades on eight rental housing bond credits in the age-restricted, military, mobile homes, and Section 8 housing subsectors were based on improved debt service coverage as a result of stronger occupancy, debt maturing, increases in the basic allowance for housing, or clarification from a borrower on one-time operating expenses funded from separate sources. We upgraded one capital fund financing program based on its strong debt service coverage. The outlook revisions for five rental housing bond entities, which include two multi-tranche multifamily static pools, were based on the portfolio's improved loan and financial performance that resulted in improved loss coverage for one of the static pools.
We took negative rating actions on four individual obligors: two downgrades, one outlook revision to negative, and one CreditWatch placement with negative implications (table 2).
The downgrades reflected deterioration in operating cash flow, given increases in operating expenses resulting in weaker debt service coverage for two rental housing bonds in the military and Section 8 housing subsectors. The CreditWatch placement was an environmental, social, and governance-related action caused by recent turnover in management and weakened transparency at a social housing provider. The outlook revision to negative on one rental housing bond entity in the Section 8 housing subsector was based on the deterioration of debt service coverage in recent years due to elevated operating expenses.
Affirmations constituted 60 out of 83 total rating actions during third-quarter 2023, or about 72% of rating actions, lower than in second-quarter 2023 (80%). As of October 2023, about 90% of ratings carry stable outlooks, slightly down from last quarter (93%), reflecting resiliency and strong metrics in our rated universe. (For more information, see recent commentaries in Related Research.) We typically review the parity rating on an issuer in conjunction with any new-money or refunding debt sale. During the third quarter, we rated 41 new sales in conjunction with affirmations (table 3). This pace was slightly higher than the new sale activity in second-quarter 2023 (39 new sales).
We also rated three new issues in the quarter(table 4).
Table 1
Positive rating actions--third-quarter 2023 | |||||||
---|---|---|---|---|---|---|---|
Issue | State | Sector | Prior rating | Current rating | Prior outlook | Current outlook | Reason |
Arizona Industrial Development Authority, AZ Multi Family Whole Loans | AZ | RHB multifamily static pool | BBB | BBB | Negative | Stable | Portfolio's improved performance, including one loan that is no longer in special servicing |
Arizona Industrial Development Authority AZ Multi Family Whole Loans Interest only | AZ | Interest only | BBB | BBB | Negative | Stable | Portfolio's improved performance, including one loan that is no longer in special servicing |
Impact Funding LLC, CA Affordable Housing 2010 Pass Through Indenture 5th Lien | CA | RHB multifamily static pool | A | A | Stable | Positive | Improved loss coverage as a result of payoffs from recoveries on distressed loans |
Impact Funding LLC, CA Affordable Housing Pool Class D 2010 Pass Through Indenture | CA | RHB multifamily static pool | BBB+ | BBB+ | Negative | Stable | Improved loss coverage as a result of payoffs from recoveries on distressed loans |
Impact Funding LLC, CA Affordable Housing Pool Class E 2010 Pass Through Indenture | CA | RHB multifamily static pool | BBB- | BBB- | Negative | Stable | Improved loss coverage as a result of payoffs from recoveries on distressed loans |
New Bedford Hsg Auth, MA HUD Capital Fund Financing | MA | HUD Capital Fund Financing Program | A+ | AA- | Stable | Stable | Stronger debt service coverage during the past two years |
Capital Impact Partners, DC General Obligation | DC | CDFI | A | A+ | Positive | Stable | Strengthening capital adequacy and financial ratios in recent years, partly as a result of an increase in net equity from the entity combining its operations with CDC Small Business Finance |
BlueHub Loan Fund, MA General Obligation ICR | MA | CDFI | A | A+ | Stable | Stable | Strong capital adequacy with a net equity-to-assets ratio averaging more than 16% during the past five years |
Quality Senior Housing Foundation of East Texas Inc., TX. Affordable Housing - Longview, Athens and WInnsboro Communities 3rd Lien | TX | RHB - age restricted | BB- | BB | Stable | Stable | Improved debt service coverage ratio following annual increase in net operating income over the past three years, partly caused by higher occupancy |
Quality Senior Housing Foundation of East Texas Inc., TX. Affordable Housing - Longview, Athens and Winnsboro Communities 2nd Lien | TX | RHB - age restricted | BB | BB+ | Stable | Stable | Improved debt service coverage ratio following annual increase in net operating income over the past three years, partly caused by higher occupancy |
Quality Senior Housing Foundation of East Texas Inc., TX. Affordable Housing - Longview, Athens and Winnsboro Communities 1st Lien | TX | RHB - age restricted | BB+ | BBB- | Stable | Stable | Improved debt service coverage ratio following annual increase in net operating income over the past three years, partly caused by higher occupancy |
Fort Irwin Land, LLC, CA Military Housing Fort Irwin/Moffet/Parks 3rd Lien | CA | RHB - military | BBB+ | A | Positive | Stable | Improved debt service coverage driven by material increases in basic allowance for housing rates to levels commensurate with the higher rating |
Corvias Military Living, LLC, RI Military Housing Fort Sill | RI | RHB - military | A- | A | Stable | Stable | Received updated financial and operating information from the borrower detailing extraordinary one-time operating expenses funded from separate sources other than net cash flow from the project, resulting in improved debt service coverage |
Caritas Affordable Housing, Inc., CA Mobile Home Park Subordinate Lien | CA | RHB - mobile homes | BBB | BBB+ | Stable | Stable | Improved maximum annual debt service coverage following the maturity of certain debt in 2023 |
NV Homestead Apartments, Ltd., FL Section 8 Affordable Housing Coral Gardens | FL | RHB - Section 8 | CCC | B- | Stable | Positive | Material improvement in debt service coverage |
Chisom Hsg Grp, WA Section 8 Affordable Housing CHG Hsg Pool Proj | WA | RHB - Section 8 | BB | BB+ | Positive | Stable | Stabilization of maximum annual debt service coverage in 2022 following the sale of one of the housing provider's 11 original properties, and the subsequent defeasance of $10.4 million in bonds.The management and governance score was also revised to weak from weak-to-very weak |
Table 2
Negative rating actions--third-quarter 2023 | |||||||
---|---|---|---|---|---|---|---|
Issue | State | Sector | Prior rating | Current rating | Prior outlook | Outlook | Reason |
Corvias Military Living, LLC, RI Military Housing Fort Sill | RI | RHB - military | A | A- | Stable | Stable | Deterioration in operating cash flow in recent years due to additional operating expenses, along with elevated costs for maintenance, repair, and insurance |
CHC Trestletree LLC, GA Section 8 Affordable Housing Steele Properties, LLC | GA | RHB - Section 8 | B | B- | Negative | Negative | Persisting cash flow pressures in conjunction with certain elevated operating expenses, resulting in very low coverage in fiscal 2022 |
Los Angeles Hsg Auth, CA Affordable Housing and Section 8 2020AB and 2021A Mortgage Revenue Bonds | CA | RHB - Section 8 | A+ | A+ | Stable | Negative | Deterioration in coverage in recent years with elevated operating costs for maintenance, repair, and insurance |
Newark Hsg Auth, NJ General Obligation | NJ | Social housing provider | A | A | Positive | Watch Neg | Placed on CreditWatch Negative due to recent turnover in management and weaked transparency |
Table 3
Affirmations and new sales--third-quarter 2023 | |||||
---|---|---|---|---|---|
Issue | State | Sector | Rating | Outlook | Type of review |
Clearinghouse CDFI, CA General Obligation ICR | CA | CDFI | A- | Stable | Full Review |
The Community Preservation Corp. NY General Obligation ICR | NY | CDFI | AA- | Stable | Full Review |
Alaska Hsg Fin Corp, AK General Obligation ICR | AK | HFA | AA+ | Stable | New Sale |
Florida Affordable Hsg Guarantee Fd, FL General Obligation ICR | FL | HFA | A+ | Stable | Full Review |
Colorado Hsg & Fin Auth, CO Single Family Mortgage Bonds Class III (GO) | CO | MRBP | AA | Stable | New Sale |
Colorado Hsg & Fin Auth, CO Single Family Mortgage Bonds Class III (GO) | CO | MRBP | AA | Stable | New Sale |
Colorado Hsg & Fin Auth, CO Single Family Mortgage Bonds Class III (GO) | CO | MRBP | AA | Stable | New Sale |
Colorado Hsg & Fin Auth, CO Single Family Mortgage Bonds Class II | CO | MRBP | AA+ | Stable | New Sale |
Colorado Hsg & Fin Auth, CO Single Family Mortgage Bonds Class II | CO | MRBP | AA+ | Stable | New Sale |
Colorado Hsg & Fin Auth, CO Single Family Mortgage Bonds Class II | CO | MRBP | AA+ | Stable | New Sale |
Colorado Hsg & Fin Auth, CO Single Family Whole Loan - Single Family Mortgage Bonds Indenture | CO | MRBP | AAA | Stable | New Sale |
Colorado Hsg & Fin Auth, CO Single Family Whole Loan - Single Family Mortgage Bonds Indenture | CO | MRBP | AAA | Stable | New Sale |
Colorado Hsg & Fin Auth, CO Single Family Whole Loan - Single Family Mortgage Bonds Indenture | CO | MRBP | AAA | Stable | New Sale |
Colorado Hsg & Fin Auth, CO Multi-Family Whole Loans - Multifamily Master Indenture | CO | MRBP | AAA | Stable | New Sale |
Colorado Hsg & Fin Auth, CO Multi-Family Whole Loans - Multifamily Master Indenture 2nd Lien | CO | MRBP | AA+ | Stable | New Sale |
Connecticut Hsg Fin Auth, CT General Bond Resolution | CT | MRBP | AAA | Stable | New Sale |
Georgia Hsg and Fin Auth, GA Single Family Whole Loan - 1976 General Resolution | GA | MRBP | AAA | Stable | New Sale |
Iowa Fin Auth, IA MBS 1991 SFMBS Resolution | IA | MRBP | AAA | Stable | New Sale |
Maine St Hsg Auth, ME Mortgage Purchase Program Resolution | ME | MRBP | AA+ | Stable | New Sale |
Maine St Hsg Auth, ME Mortgage Purchase Program Resolution | ME | MRBP | AA+ | Stable | New Sale |
Michigan St Hsg Dev Auth, MI General Resolution | MI | MRBP | AA+ | Stable | New Sale |
Minnesota Hsg Fin Agy, MN Rental Housing Bond Resolution | MN | MRBP | AAA | Stable | New Sale |
Minnesota Housing Finance Agency, MN Single Family | MN | MRBP | AA+ | Stable | New Sale |
Minnesota Housing Finance Agency, MN Single Family | MN | MRBP | AA+ | Stable | New Sale |
Minnesota Housing Finance Agency, MN Single Family | MN | MRBP | AA+ | Stable | New Sale |
Missouri Hsg Dev Comm, MO First Place Homeownership Loan Program | MO | MRBP | AA+ | Stable | New Sale |
Montana Brd of Hsg MT, SF I Indenture | MT | MRBP | AA+ | Stable | New Sale |
Nebraska Invest Fin Auth, NE SFHRB Resolution | NE | MRBP | AAA | Stable | New Sale |
Nevada Hsg Div, NV Single Family Multi-Agency MBS 2008 MBS Resolution | NV | MRBP | AA+ | Stable | New Sale |
North Carolina Hsg Fin Agy, NC Single Family MBS Whole Loan - 1998 Trust Agreement | NC | MRBP | AA+ | Stable | New Sale |
Rhode Island Housing & Mortgage Finance Corporation, RI Homeownership Opportunity Bond Resolution | RI | MRBP | AA+ | Stable | New Sale |
South Dakota Hsg Dev Auth, SD Single Family Whole Loan - Homeownership Mortgage Bond Resolution (1977 Indenture) | SD | MRBP | AAA | Stable | New Sale |
Tennessee Hsg Dev Agy, TN Single Family Whole Loan - 2013 General Residential Finance Program | TN | MRBP | AA+ | Stable | New Sale |
Texas Department of Housing & Community Affairs Single Family Mortgage Rev Bnd Indenture | TX | MRBP | AA+ | Stable | New Sale |
Utah Hsg Corp., UT Single Family Multi-Agency MBS TEMS | UT | MRBP | AA+ | Stable | New Sale |
Utah Hsg Corp., UT Single Family Multi-Agency MBS TEMS | UT | MRBP | AA+ | Stable | New Sale |
Utah Hsg Corp., UT Single Family Multi-Agency MBS TEMS | UT | MRBP | AA+ | Stable | New Sale |
Virginia Hsg Dev Auth, VA Commonwealth Mortgage Bonds w GO | VA | MRBP | AAA | Stable | New Sale |
Virginia Housing Development Authority VA Rental Housing Bonds w GO | VA | MRBP | AA+ | Stable | New Sale |
West Virginia Hsg Dev Fd, WV Housing Finance Bond w GO | WV | MRBP | AAA | Stable | New Sale |
Wisconsin Hsg & Econ Dev Auth, WI Home Ownership Revenue Bonds (1988 Resolution) w GO | WI | MRBP | AA+ | Stable | New Sale |
Fort Irwin Land, LLC, CA Military Housing Fort Irwin/Moffet/Parks 2nd Lien | CA | RHB - Military | AA- | Stable | Full Review |
Fort Irwin Land, LLC, CA Military Housing Fort Irwin/Moffet/Parks | CA | RHB - Military | AA | Stable | Full Review |
New Orleans Navy Hsg, LLC, LA Military Housing | LA | RHB - Military | A+ | Stable | Full Review |
Mid-Atlantic Fam Comntys LLC, VA Military Housing 3rd Lien | VA | RHB - Military | A- | Stable | Full Review |
Mid-Atlantic Fam Comntys LLC, VA Military Housing | VA | RHB - Military | AA- | Stable | Full Review |
Caritas Acquisitions I, LLC, CA Affordable Housing Caritas MHP Proj | CA | RHB - Mobile Homes | A- | Stable | New Sale |
Caritas Affordable Hsg, Inc., CA Affordable Housing Caritas Afford Hsg Inc | CA | RHB - Mobile Homes | A- | Stable | Full Review |
Impact Funding LLC, CA Affordable Housing 2010 Pass Through Indenture 4th Lien | CA | RHB Multifamily Static Pool | AA | Stable | Full Review |
Impact Funding LLC, CA Affordable Housing 2010 Pass Through Indenture | CA | RHB Multifamily Static Pool | AA+ | Stable | Full Review |
Impact Funding LLC, CA Affordable Housing 2010 Pass Through Indenture 3rd Lien | CA | RHB Multifamily Static Pool | AA | Stable | Full Review |
Impact Funding LLC, CA Affordable Housing 2010 Pass Through Indenture 2nd Lien | CA | RHB Multifamily Static Pool | AA+ | Stable | Full Review |
Impact Funding LLC CA Pool 3rd LIEN Interest Only | CA | Interest Only | AA | Stable | Full Review |
Impact Funding LLC CA Pool 1st LIEN Interest Only | CA | Interest Only | AA+ | Stable | Full Review |
Glorieta Partners, Ltd., FL Section 8 Affordable Housing Gardens Apartment Proj | FL | RHB - Section 8 | CCC | Negative | Full Review |
American Agape Foundn, Inc., TX Section 8 Affordable Housing 2nd Lien | TX | RHB - Section 8 | CCC+ | Negative | Full Review |
American Agape Foundn, Inc., TX Section 8 Affordable Housing | TX | RHB - Section 8 | CCC+ | Negative | Full Review |
Trinity Affordable Hsg Corp, IL Affordable Housing Estates at Eagles Pointe Proj | IL | RHB - Unenhanced | B+ | Stable | Full Review |
NHP Foundation, Social Housing Provider ICR | DC | Social housing provider | AA- | Stable | New Sale |
King Cnty Hsg Auth, WA General Obligation ICR | WA | Social housing provider | AA | Stable | New Sale |
Table 4
New issues--third-quarter 2023 | |||||
---|---|---|---|---|---|
Issue | State | Sector | Rating | Outlook | Type of review |
Freddie Mac, VA Tax-exempt Multifamily GSE Guaranteed Pass-Through Series 2023-ML17 | VA | FEH multifamily pass through | AA+ | Stable | New sale |
National Finance Authority , NH National Housing Pool 2023-2 | CA | RHB multifamily static pool | BBB | Stable | New sale |
Washington State Housing Finance Commission, WA Affordable Housing Securitization Pool Series 2023-1 | WA | RHB multifamily static pool | BBB | Stable | New sale |
Analyses associated with positive rating actions
- New Bedford Housing Authority, Massachusetts, Capital Fund Financing Program, Sept. 15, 2023
- Quality Senior Housing Foundation of East Texas Inc.; Affordable Housing, Sept. 15, 2023
- BlueHub Loan Fund Inc., Sept. 13, 2023
- Capital Impact Partners, D.C., Sept. 3, 2023
- Fort Irwin Land LLC, California; Military Housing, Sept. 2, 2023
- Corvias Military Living LLC, Rhode Island; Military Housing, Sept. 1, 2023
- Caritas Acquisitions I LLC, California; Affordable Housing, Aug. 23, 2023
- IMPACT Funding LLC, California; Multifamily Whole Loan, July 29, 2023
- NV Homestead Apartments LP; Section 8, July 17, 2023
- Chisom Housing Group, Washington; Section 8, July 20, 2023
- Arizona Industrial Development Authority; Multifamily Whole Loan, July 12, 2023
Analyses associated with negative rating actions
- Corvias Military Living LLC, Rhode Island, Military Housing, Sept. 1, 2023
- Los Angeles Housing Authority; Affordable Housing; Section 8, Aug. 21, 2023
- CHC Trestletree LLC, Georgia, Section 8, Aug. 10, 2023
- Newark Housing Authority, New Jersey, Aug. 10, 2023
Related Research
- U.S. Social Housing Providers Have The Foundation to Insulate Against New Post-Pandemic Risks, Oct. 4, 2023
- U.S. Housing Finance Agencies 2022 Medians: Strong Metrics, Balance Sheets Reinforce Credit Quality, Sept. 19, 2023
- U.S. Mortgage Revenue Bond Program Medians: Strong Credit Quality Keeps The House In Order, Sept. 12, 2023
- What U.S. CDFI Ratios’ Resilience Through Changing Economic Landscapes Means For Long-Term Credit Quality, Aug. 10, 2023
- U.S. Rental Housing Sector Rating Actions Decline As Finances Stabilize For Most Properties, June 21, 2023
- Outlook For U.S. Public Finance Housing: Economic Winds Won't Blow The House Down, published Jan. 19, 2023
This report does not constitute a rating action.
Primary Credit Analyst: | Shirley Murillo, New York (646) 831-2467; shirley.murillo@spglobal.com |
Secondary Contact: | Marian Zucker, New York + 1 (212) 438 2150; marian.zucker@spglobal.com |
Research Contributor: | Tribhuvan Chauhan, CRISIL Global Analytical Center, an S&P affiliate, Mumbai |
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