Fitch Ratings has affirmed its ''BBB+'' rating on the approximately $12.2 million Massachusetts Industrial Finance Agency fixed-rate revenue bonds series 1998A (Chestnut Knoll at Glenmeadow Project). The Rating Outlook is Stable.

The ''BBB+'' rating affirmation is supported by Glenmeadow''s strong cash position, steady occupancy, and an improved market position. As of Aug. 31, 2009, Glenmeadow had $17.6 million of unrestricted cash and investments, which equated to 881 days cash on hand (DCOH), 156% cash-to-debt, and a 14.6 times (x) cushion ratio. All of Glenmeadow''s liquidity indicators are well above Fitch''s 2009 ''BBB'' medians.

Despite the decline in the organization''s balance sheet from 2008 levels of $20.1 million, Fitch views Glenmeadow''s balance sheet as a key credit strength and believes it will remain strong over the medium term. Through the 11-month period ending Aug. 31 2009, occupancy indicators at Glenmeadow continued to be high, with independent living unit (ILU) occupancy at 95.1% and assisted living unit (ALU) occupancy at 96.8%. In addition, there were favorable changes in the competitive landscape in 2009. Specifically, Glenmeadow''s primary competitor, Reed''s Landing, will no longer compete with Glenmeadow after being sold and subsequently restructured. Further, an additional competitor, Sunrise Senior Living, did not exercise its option to construct a competing facility in the Springfield area.

Credit concerns include an anticipated debt service coverage (DSC) rate covenant violation for fiscal 2009, continued reliance on investment income, and a weakened real estate market. In fiscal 2009, management anticipates to violate the DSC covenant rate of 1.2x. The violation does not constitute a default or event of default, and is the first time that Glenmeadow has failed to meet this covenant. This was largely due to realized losses in investments of $591,408, and to $372,860 in entrance fees being refunded without any offset entrance fee receipts. Glenmeadow is seeking (and expects to receive) a waiver for the failed covenant. Based on interim results ending Aug. 30, 2009 Glenmeadow would have met the DSC covenant rate had the aforementioned events not occurred. In Fitch''s opinion, the violation of this covenant does not represent a fundamental decline in overall operations, nor are these events dilutive to Glenmeadow''s overall credit quality. The further weakening of the local real estate market is posing additional credit concern. According to the National Association of Realtors, the median single family home price in the Springfield, MA area in the second quarter of 2009 declined by 9.3% from the second quarter in 2008. Management has reported an overall increase in time to turn over a unit, particularly for those consumers that own a house. Furthermore, Glenmeadow has historically relied upon investment income to generate positive bottom-line income and cover debt service. While Glenmeadow had significant investment losses in 2009, Fitch believes that updates to its investment policy in 2008 and portfolio rebalancing efforts in 2009 were appropriate given its strong liquidity.

The Stable Outlook reflects Fitch''s expectation that Glenmeadow''s liquidity will remain strong at current levels well above the ''BBB'' median, occupancy levels will continue to be consistently high, and no further erosion of profitability will occur in the near to medium term.

Glenmeadow is a Type C continuing care retirement community (CCRC) with 113 ILUs and 34 ALUs located in Longmeadow, MA. With no skilled nursing units, Glenmeadow has none of the risks associated with providing healthcare services, which Fitch views as a credit positive. With $6.9 million in revenues in fiscal 2008, Glenmeadow is one of the smallest senior facilities in Fitch''s portfolio.

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