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Fitch Ratings - Chicago - 10 Mar 2023: Fitch Ratings affirmed the rating on $82 million series 2017A and B revenue refunding bonds and $35 million series 2023 bonds issued by the Colorado Health Facilities Authority on behalf of Frasier Meadows Manor, Inc. (Frasier) at 'BBB-'. Fitch has also affirmed Frasier's Issuer Default Rating at 'BBB-'.

The Rating Outlook is Stable

Frasier Meadows Manor, Inc. (CO)

LT IDR

BBB-

Affirmed

LT

BBB-

Affirmed

BBB-

VIEW ADDITIONAL RATING DETAILS

Payment on the bonds is secured by a gross revenue pledge and first mortgage lien. There is a debt service reserve fund associated with the bonds.

The affirmation of the 'BBB-' rating reflects Frasier's stable operating risk profile and expectations for balance sheet growth. Frasier's strong revenue defensibility with limited competition in a favorable market balances against its elevated leverage profile with an average cash-to-adjusted debt of 40% over the past four years compared to days cash on hand (DCOH) exceeding 600 over the same time frame.

Revenue Defensibility: 'a'

Single Site LPC with Strong Demand and Pricing Characteristics

Frasier is a single-site provider with limited competition. Substantial barriers to entry prevent additional life plan communities (LPCs) from entering the Boulder, CO service area. Utilization has been consistently strong, generally in the mid to upper 90% range over the past several years. Frasier's waitlist includes nearly 500 households. Frasier has a history of regular fee increases and weighted average entrance fees are substantially below prevailing housing prices in the market supporting the strong revenue defensibility assessment.

Operating Risk: 'bbb'

Midrange Profitability and Modest Capital Expenditures

Fitch's assessment of Frasier's operating risk is midrange based on profitability ratios that have consistently fallen within the midrange assessment since FY 2021 (June YE). For 2021 and 2022, Frasier's operating ratio, net operating margin (NOM) and NOM-adjusted averaged 98%, 14.7% and 44.2%; with consistent results in the second quarter of 2023 of 94.8%, 16.2% and 41.9% respectively. Fitch expects Frasier to sustain these levels over the next several years.

Due to extensive capital investment between 2018 and 2020, Frasier's capital expenditures averaged about 550% of depreciation over the past five years, with depreciation moderating in the past two years closer to depreciation expense. The resulting average age of plant is low at 6.8 years. Management is budgeting for modest routine capital expenditures over the next several years at about 75% of depreciation. Given Frasier's strong demand, management is considering an expansion plan. However, planning will not begin in earnest until a successor CEO has been selected and acclimated to the role. Frasier's CEO Tim Johnson announced his plans to retire at the end of June, 2023 and the board has begun searching for a successor CEO.

Frasier's capital-related metrics are consistent with the midrange operating risk assessment. For 2021 and 2022, Frasier's revenue-only maximum annual debt service coverage (MADS), debt-to-net available, and MADS as a percentage of revenues averaged 1.1x, 5.7x and 19.4%, with consistent results in the second quarter of 2023 of 1.2x, 5.2x and 17.8%, respectively.

Frasier's contract type is predominantly type B (modified fee-for-service). Fitch considers this contract type to have moderate actuarial and future service liability risk.

Financial Profile: 'bbb'

Growing Liquidity Balanced Against Elevated Leverage

As of YE 2022, Frasier had unrestricted cash and investments of approximately $55.9 million. This represented about 49.6% of total adjusted debt, which includes about $128 million of long-term debt. Liquidity has grown from $42 million in 2019 and is expected to incrementally improve over the next several years and build the balance sheet.

Through Fitch's baseline scenario, or Fitch's estimate of financial performance over the next five years given current economic expectations, Fitch expects that Frasier will see MADS coverage near 2.0x. Despite the business stress and economic stress assumed in Fitch's stress case scenario, Frasier maintains cash-to-adjusted debt levels that are consistent with the 'BBB-' rating. Frasier had 646 DCOH as of June 30, 2022, resulting in a liquidity profile assessment that is neutral to the rating outcome.

No asymmetric risk considerations were relevant to the rating determination.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

--Frasier's financial profile remains stable through Fitch's stress case scenario. However, a decrease in cash-to-adjusted debt below 35% could pressure the current rating;

--Additionally, the rating could be pressured if operating performance deteriorates such that revenue-only MADS coverage falls below 0x or if the NOM falls below 3%.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

--Continued balance sheet accretion such that cash-to-adjusted debt levels are expected to improve and be sustained at levels approaching 80%.

International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

Established in 1956, Frasier owns and operates a single-site LPC with 302 independent living units (ILUs), 19 assisted living units, 19 memory care units and 54 skilled nursing facilities beds on a 20-acre campus in Boulder, CO. Frasier currently offers a type B modified-fee-for-service contract, with 50% refundable or nonrefundable entrance fee residency agreements. Nonrefundable entrance fees are approximately 25% lower than the refundable entrance fees. All agreements provide a modest discount for health care benefits as well as 30 free health care days per ILU per year in a semiprivate room. Entrance fees for ILUs range from $87,000 to $1,174,000. Monthly service fees range from $2,121 to $5,708.

In addition to the sources of information identified in Fitch's applicable criteria specified below, this action was informed by information from Lumesis.

The principal sources of information used in the analysis are described in the Applicable Criteria.

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

Additional information is available on www.fitchratings.com

The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer’s available public disclosure.

Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).

All Fitch Ratings (Fitch) credit ratings are subject to certain limitations and disclaimers. Please read these limitations and disclaimers by following this link: https://www.fitchratings.com/understandingcreditratings. In addition, the following

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The ratings above were solicited and assigned or maintained by Fitch at the request of the rated entity/issuer or a related third party. Any exceptions follow below.

Fitch’s international credit ratings produced outside the EU or the UK, as the case may be, are endorsed for use by regulated entities within the EU or the UK, respectively, for regulatory purposes, pursuant to the terms of the EU CRA Regulation or the UK Credit Rating Agencies (Amendment etc.) (EU Exit) Regulations 2019, as the case may be. Fitch’s approach to endorsement in the EU and the UK can be found on Fitch’s Regulatory Affairs page on Fitch’s website. The endorsement status of international credit ratings is provided within the entity summary page for each rated entity and in the transaction detail pages for structured finance transactions on the Fitch website. These disclosures are updated on a daily basis.

After two weeks of negotiations, delegates of the United Nations reached a historic agreement this week to protect marine biodiversity in international waters. This treaty would place portions of the world’s oceans, known as the “high seas,” into protected areas and allocate more money for marine conservation.

Due to highly fragmented governance, until now there has not been a coherent mechanism in place to protect the high seas—yet they harbor incredible marine biodiversity, including deep sea coral reef ecosystems and critically important migratory routes for fish, birds and mammals.

Emily Nocito, a graduate student in environmental studies who studies international environmental governance and marine conservation, was present at the U.N. meeting in New York City. Mike Gil, assistant professor of ecology and evolutionary biology, is a marine biologist who has studied plastic pollution in the high seas.

Nocito and Gil explain why the high seas matter and why the new treaty will benefit all of us.

What are the high seas?

Nocito: The high seas are essentially any ocean waters 200 nautical miles out from a coastline. That first 200 fall under national jurisdiction of whatever country that shoreline belongs to, but once you reach the 200 mark, it is considered the high seas. They are also called international waters, or we sometimes say “areas beyond national jurisdiction.” It is not owned by a single country or even a single continent, it is a global common. And that's why it's fallen to the United Nations to take care of these oceans.

Why are the high seas important?

Nocito: The high seas make up two-thirds of our global ocean, about half of our planet. They are important for migratory species, such as whales, sea turtles and sharks and they are home to well over 200,000 marine species. We are also reliant on our global oceans for fisheries, and they help mitigate climate effects. Even though you may never see or experience the high seas, they're still fundamentally important to humans.

Gil: There are also biodiversity hotspots in the high seas that can support an incredible diversity of marine life. Many marine species are used in the synthesis of pharmaceutical products that help with human ailments, like cancer treatments. But we haven't rigorously explored many of these places, and so it is entirely possible that there are yet to be discovered species in high seas environments that could help humankind with human health issues.

Who was involved in this landmark agreement?

Nocito: This agreement is under the U.N. Convention on the Law of the Sea, which is what has been primarily the form of governance in international waters. Countries of the U.N. were present, as they are the ones that will be eventually hopefully adopting and ratifying the agreement. But there were also research institutions, nongovernmental organizations and U.N. bodies.

Why is this treaty a big deal?

Gil: It's taken two decades of negotiation to get to this point. It’s a game-changer: It sets up the necessary infrastructure for protections to be made on specific areas of the high seas environments, likely in the form of what we call marine reserves, similar to national parks on land. This allows us to protect and preserve these ecosystems in a state that is as close to their natural state as we can manage.

Nocito: This is the first piece of ocean governance at the international level we've had in decades. So to be there at this pivotal, history-setting moment is not just wickedly cool, but also gives a lot of faith to diplomacy. This should provide a beacon of hope for not just our oceans, but other things that we are trying to protect in our environment. It can be done.

How will the treaty protect our oceans?

Nocito: Marine protected areas are a management tool within a geographic boundary where you can have more regulations of human use. So maybe no fishing or limited fishing, maybe no mining, or no shipping routes through certain areas, which can protect key ecosystems.

Gil: What marine reserves can do is alleviate human driven pressures that harm ecosystems. Species like sharks, sea turtles, and dolphins use high seas environments for migration and as important food sources—and then they also contribute to the food webs of coastal systems like coral reefs and seagrass meadows. If those organisms are better protected, they're more likely to continue to be able to play an important role in near-shore environments, and support the resilience of those coastal environments that humans also heavily depend upon.

How will this treaty benefit all of us?

Gil: The high seas make up 60% of our oceans, which contribute an estimated $1.5 trillion annually to the global economy. If fisheries industries that are dependent on high seas environments collapse, that will have economic ramifications globally. In addition, between 3 and 3.5 billion people in the world depend on seafood as a primary food source—that's something like 40% of the global population. It’s also true that we harvest genetic resources from marine organisms that are used to create pharmaceuticals. So if you don't care about anything else, this treaty helps ensure the ability of humankind to utilize nature to support human life.

What happens next?

Nocito: First and foremost, the treaty needs to be adopted and ratified. Then you need to create a conference of parties, a science and technical body, and then the real work can start to begin. Who is going to enforce it, how much is it going to cost? All of those are still fundamental questions that this conference of parties is going to have to sort out. But we're celebrating this huge win. It is the beginning of a new chapter.

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The past three years at the Boulder Elks Lodge and Events Center have been tumultuous, to say the least. The lodge shut down most of its programming during the pandemic — though you could still swim in the heated pool while social distancing — and then faced a water leak that destroyed its iconic dance floor in 2022. Now celebrating its grand reopening on Saturday, March 11, the lodge is poised to return with its historically groovy grace intact.

Founded in 1900, the 123-year-old lodge has been serving the Boulder community for longer than most remember. Part of the Elks National Foundation, the lodge is much more than an event center and has several community programs that constantly give back to the city. Jan Stull, a fifteen-year Elks member and chairwoman of the board, was drawn to the organization because of its Medical Equipment Loan Program, which provides temporary use of needed medical equipment to members of the community, free of charge. "I had some surgery; I needed a walker, and the hospital told us to go to the Elks," Stull recalls. "So we got one, and I realized what a great organization it was. I was retired, and I thought I should volunteer and help."

The Medical Equipment Loan Program is just one example of the organization's community-focused work. The Elks Lodge has an extensive high school scholarship program and partners with the Veterans Community Project to assist with projects like Longmont's upcoming "tiny village," a small community of homes for unhoused veterans that is set to open in the next couple of months. "We do an awful lot of stuff for the community, and I've met some wonderful people over the years," Stull says, emphasizing that the work the Elks do in the community is why she enjoys her position.

Stull also holds the title of chief cook and bottle washer for the lodge, which hosts a dinner two Fridays a month. Stull helps with the cooking, providing a hearty, all-you-can-eat meal for a small fee. The dinners have morphed into a community open-mic night, as well; musicians will snag the stage to perform and even teach other, less musically inclined guests how to play. Older members of the lodge are eager for the opportunity to interact with Boulder's diverse community members at intergenerational dinners, warm summer evening barbecues, heated pool swims and, of course, evenings spent spinning on the dance floor.

Hazel Miller & the Collective will perform at the lodge's grand reopening party on Saturday, March 11, providing groovy tunes that will help members break in the new spring-loaded dance floor. Miller played at the Boulder Elks Lodge in the ’80s, and after a thirty-year hiatus from the venue, returned in January to see the new floor. "She saw this 3,000-foot dance floor and her knees got weak. I had to hold her up," Mark Wood, the lodge's events and marketing coordinator, recalls with a chuckle.

Both Wood and Stull agree that the lodge is expected to return with a bang; with the new dance floor and the return of local talent — and, of course, Stull's cooking — they expect the venue to be more popular than it was before the pandemic.

Elks Lodge Grand Reopening with Hazel Miller & the Collective, 7 p.m. Saturday, March 11, Elks Lodge, 3975 28th Street, Boulder. Tickets are $20-$25.

LAS VEGAS — Tad Boyle is far too savvy to blame officiating for any defeat. And he certainly gave the top-seeded, second-ranked UCLA Bruins plenty of credit.

Still, a few lopsided numbers told the story. And Boyle made certain to point them out.

It was a frustrating result for the CU men’s basketball team on Thursday, as the Buffaloes were eliminated in the Pac-12 Conference tournament quarterfinals in an 80-69 defeat against top-seeded, second-ranked UCLA. Yet those frustrations for the Buffs and their head coach were magnified by how the second half unfolded at T-Mobile Arena.

At issue was not one specific play, or call. It was the totality of the foul discrepancy, particularly in the second half, that set off Boyle, who received two technical fouls in quick succession with 54.4 seconds left, resulting in the first ejection in his 13 seasons at CU.

UCLA went 24-for-31 at the free throw line, while the Buffs went 7-for-11. UCLA was called for 10 fouls in the first half compared to nine against the Buffs, but in the second half the Bruins were whistled just five times while CU was called for 15 fouls.

“Obviously I had a disagreement on multiple occasions. That’s just part of the game,” Boyle said. “But the one thing I’m going to do for these guys is I’m going to fight for this team when I feel like they’re fighting for Colorado across their chests. That’s what I did.

“Look, we didn’t lose this game because of officiating. Amari Bailey for UCLA was terrific. (Jaime) Jaquez and (Tyger) Campbell do what they did. UCLA is a good basketball team. They’re well-coached. They’re tough. But it’s frustrating. To me, the difference in the game was our inability to get to the free throw line. Our inability to get to the free throw line was the difference in the game. And our turnovers.”

Boyle said he was ejected once during his four seasons as the head coach at Northern Colorado prior to arriving at CU when he kicked over a trash can during a game.

Big man strides

Boyle maintained confidence in 7-foot-1 center Lawson Lovering throughout the season, even when the sophomore was struggling mightily on offense through the first half of the season. Lovering is beginning to reward his coach’s faith.

Lovering continued the most productive stretch of his career by going 3-for-4 with nine points against UCLA. A lowly .526 free throw shooter during the regular season, Lovering went 4-for-6 at the line in the two Pac-12 tournament games.

Over the past six games, Lovering has averaged 8.0 points and 5.0 rebounds.

“It’s just more experience playing,” said Lovering, who missed the second half of his freshman season last year due to a knee injury. “Just having to step up with guys injured. I’m just playing, just growing. I’m just slowing down. I’ve always been a good passer and it’s coming together in the games.”

Disappearing act

CU junior wing Nique Clifford was a beast during the Buffs’ win against Utah in the regular season finale, recording the first double-double of his career. But, as has been the case throughout the season for Clifford, he was unable to parlay that momentum in Vegas.

Clifford went scoreless against UCLA on Thursday and scored just two points in nearly 38 minutes in CU’s two conference tournament games. He went a combined 1-for-10 in the two games, and while Clifford contributed eight rebounds in CU’s first-round win against Washington, he had just one rebound against the Bruins and finished the tournament with one assist and six turnovers.

Clifford missed his two free throw attempts against UCLA, dropping his season percentage to .512 (22-for-43).

Notable

UCLA’s Amari Bailey, named to the Pac-12 All-Freshman team earlier this week, scored a season-high 26 points. … Former CU guard Keeshawn Barthelemy matched a season-high with 17 points for Oregon in the Ducks’ quarterfinal win against Washington State. … Friday’s semifinals will be without CU for the first time since 2018. The Buffs reached the semis in 2019, 2021 and 2022, and the tournament was canceled due to COVID after the first round in 2020. … CU’s .510 shooting percentage was its fifth-best mark of the season and its No. 2 mark against a Pac-12 foe. … Thursday’s loss featured 17 lead changes and six ties.

To those involved in the JCC Community, February fundraising, pre-2021, always meant Reflections–a formal affair replete with a program and paddle raise.

During the COVID-19 pandemic, the Boulder JCC introduced JFest. With the intention of celebrating the power of the community at a time when we were unable to gather in person, JFest highlighted creative virtual programming with a month of fun and interactive online events culminating in a 36-hour online fundraising drive.

In 2023, with restrictions easing up, the time was right to enhance the JFest format, allowing for more opportunities to gather in person. The month of February remained JFest and consisted of a packed schedule of programs of all sizes, and catering to all interests. Some highlights included a presentation by Executive Director, Jonathan Lev, sharing his experiences as a participant in the 2022 Ride for the Living, Pickleball Palooza, which brought together fans of this fast-growing sport for a fun afternoon of connecting on the court, Alumni Shabbat, reuniting Early Childhood Center and Cherryvale Day Camp children for an evening of togetherness, and Pub Trivia, which led to some fierce, friendly competition! We welcomed over 1,500 people, friends old and new, for programming throughout the month.

A key part of JFest is the 36-hour fundraising drive, and our community showed up strong in support of the Boulder JCC. We are proud to share that we exceeded our fundraising goal and set a JFest record of $340,000 raised. These funds are crucial in making all that we do possible and we are eternally grateful for this support.

The month concluded with the JFest Celebration Party on February 25, at which we were overjoyed to be able to celebrate alongside close to 400 guests at a transformed JCC. Combining elements of Reflections, along with the feedback we had gathered from our JCC family about what they wanted in a gala, this party was an opportunity for us to shine a light back on what matters most, the community. We dropped the fundraising aspect of the evening and took the time to be together and celebrate our reunion.

This year’s JFest and JFest Celebration would not have been possible without the dedication of our incredible community and the support of the 2023 JFest event sponsors. Stay tuned for next year’s plans!