OREANDA-NEWS. Fitch Ratings has affirmed the 'BBB' rating on the following bonds issued by Illinois Finance Authority on behalf of Tabor Hills:

--\\$19.195 million, series 2006 revenue bonds.

The Rating Outlook is Stable.

SECURITY

The bonds are secured by the obligated group's gross revenues, a mortgage lien on Tabor Hill's facilities, and a debt service reserve fund.

KEY RATING DRIVERS

CONSISTENT LIQUIDITY GROWTH: Unrestricted cash and investments has grown year-over-year for the past six years and is good for the rating category equaling 323 days cash on hand (DCOH), 11.4x cushion ratio and 89% cash-to-debt at June 30, 2015.

SOLID OPERATING PROFITABILITY: After slim performance in fiscals 2011 and 2012, operating profitability was very good over the last two fiscal years and outperforms the 'BBB' category medians. Tabor Hills' effective management team, incremental increases in skilled nursing facility (SNF) private-pay revenues, and minimal reliance on net entrance fees and investment gains are viewed positively by Fitch.

LOW DEBT POSITION: In fiscal 2014, maximum annual debt service (MADS) represented just 7.2% of total revenue compared to the 'BBB' category median of 12.3%. In addition, adjusted debt-to-capitalization of 43.2% in fiscal 2014 is well below the 59% 'BBB' category median.

STRONG OVERALL DEMAND: Demand at Tabor Hills remains healthy with averaged occupancy of 94% in the independent living units (ILU), 86.3% at the assisted living units (ALU), and 90% in the SNF during the first nine months of fiscal 2015. ALU demand softened over the past few years as a result of turnover in the director of resident service position. New leadership is in place and average ALU occupancy increased in each of the last three fiscal quarters.

HIGH SKILLED-NURSING EXPOSURE: Tabor Hills' large exposure to skilled nursing services (at 74% of net resident service revenues in fiscal 2014) and its Medicaid business (18% of net revenues in fiscal 2014) is somewhat of a credit concern as it subjects them to greater operating risks due to high patient attrition and governmental reimbursement pressures.

RATING SENSITIVITIES

SUSTAINED OPERATIONS: Fitch expects Tabor Hills to maintain its occupancy and operating performance at levels that will allow for consistent debt service coverage in line with 'BBB' category medians.

BALANCE SHEET MAINTENANCE: Tabor Hills plans elevated capital spending over the next several years funded with cash flow and equity. Any significant reduction in liquidity or capital-related metrics could negatively pressure the rating.

CREDIT PROFILE

Located in Naperville, IL (approximately 28 miles west of Chicago), Tabor Hills is a type-C continuing care retirement community consisting of 104 town-home ILUs, 95 ALUs, and 211 SNF beds. Total operating revenue in fiscal 2014 was \\$20.5 million.

CONTINUED LIQUIDITY IMPROVEMENT

Tabor Hills has grown its unrestricted cash and investment position in each of the last six years, which led to a steady improvement in liquidity metrics. At June 30, 2015, Tabor Hills' unrestricted cash and investments totaled \\$17 million, which equates to 89% of long-term debt and 11.4x cushion ratio. This compares favorably to the respective 'BBB' category medians of 60.2% and 6.9x. Liquidity verses expenses improved over this period as well and DCOH was 323 at June 30, 2015 compared to the 'BBB' category median of 408 days. Liquidity balances are expected to moderate during the next several years as a result of higher routine capital expenditures and a \\$7 million project to expand (20 beds) and renovate its SNF facility.

GOOD, BUT SOFTENED OPERATING PROFITABILITY

Tabor Hills' consistently solid occupancy and good expense controls (particularly for employee pensions) supported very good profitability during the last two fiscal years. Effective Dec. 31, 2013, Tabor Hills froze its defined benefit pension plan, dramatically reducing it pension expenses during fiscal 2013 and 2014. After a record year in fiscal 2013, the operating margin and net operating margin were a healthy 6.5% and 16.6%, respectively, in fiscal 2014. Additionally, the 87.8% operating ratio was favorably below the 97.4% 'BBB' category median. Nonetheless, earnings performance in the current fiscal year softened as a result of a large increase in pension expenses. Through the nine-months ending June 30, 2015, Tabor Hills produced a 1.3% operating margin, 10.1% net operating margin, and 93.4% operating ratio. While Fitch views the elimination of the pension plan as positive over the long term, since benefit expenses are more predictable and liability growth is capped, volatility is expected in the medium term.

MANAGEABLE DEBT POSITION

Tabor Hills' debt position is manageable with all fixed-rate debt and no swaps. The debt service coverage ratio of 2.5x in fiscal 2014 exceeded the 'BBB' category median of 2.0x. Through the nine months ended June 30, 2015, the debt service coverage ratio weakened as a result of the lowered profitability, but remained adequate at 1.6x. Furthermore, MADS is a moderate 7.2% of fiscal 2014 revenues, comparing favorably to the 'BBB' category median of 12.3%. Moreover, no additional debt is planned over the next several years.

HIGH SKILLED-NURSING EXPOSURE

A credit concern is Tabor Hills' high proportion of SNF beds relative to ILUs, with approximately two nursing beds for every ILU. This concentration subjects Tabor Hills to governmental reimbursement modifications, regulatory items, healthcare practice changes, and competition for patients from higher unit turnover. However, Tabor Hills received 'distinct part' designation under Medicaid, which limits Medicaid eligible beds to 60 of its licensed 211 SNF beds. Management continually demonstrates its ability to effectively balance occupancy and payor mix and this designation assists in operating their skilled nursing business. The planned 20-bed SNF expansion will create private rooms focusing on growing short-term Medicare patients and additional private-pay residents. Finally, SNF private-pay business increased to a very healthy 67% of net revenues for the nine months ending June 30, 2015, up from about 50% in fiscal 2010.

DISCLOSURE

Tabor Hills covenants to provide audited financial information to the Master Trustee, the Illinois Finance Authority and the Bond Trustee within 120 days of fiscal year-end, and quarterly financial information including a balance sheet, income statement and cash flow statement within 45 days of each quarter-end. Tabor Hills also posts audited, monthly and operating information on EMMA.