Fitch affirms its rating of 'AAA/F1+' on the Hall Family
Foundation, its 'AAA/F1+' rating on the Missouri Development Finance
Board Variable Rate Demand Cultural Facilities Bonds, (The Nelson
Gallery Foundation), Series 2004A. Fitch also affirms its underlying
'AA' rating on Missouri Development Finance Board's fixed rate
cultural facility revenue bonds, series 2001A bonds and the variable
rate demand cultural facilities revenue bonds, series 2001B bonds
issued on behalf of the Nelson Gallery Foundation. The series 2001A
and 2001B bonds are rated 'AAA' based on insurance provided by MBIA.
The series 2001B variable rate bonds also have a short term rating of
'F1+' due to a standby bond purchase agreement with JP Morgan Chase
Bank N.A. which has an expiration date of Dec. 6, 2006. The 'F1+'
rating on the series 2001B bonds remains unchanged. The Outlook is
Stable.
The 'AAA/F1+' rating for the Hall Foundation is supported primarily by its substantial level of unrestricted net assets, low operating costs, an appropriate investment strategy for its long term investment horizon, and lack of existing debt with no plans to issue debt or incur additional obligations related to the issuance of debt by a third party beyond the $60 million for the Nelson Gallery Foundation. The Hall Foundation is a grant-making organization required to distribute annually roughly 5% of its average monthly asset value. Each year the Hall Foundation investments generate dividend and interest income that averages approximately 3% of the value of net assets. To meet the 5% spending requirement, the investment income is supplemented by the sale of investments. Unaudited financial statements for the fiscal year ended Dec. 31, 2005 reflect total revenues of $64.2 million and expenses of $33.9 million. Approximately 80% of the expenses are related to charitable distributions. Unrestricted net assets were $814 million and were invested in equities (60%), cash and fixed income securities (21%) and alternative assets (18%). In addition to the $814 million of net assets of the Hall Family Foundation that could be used as liquidity for any series 2004A tendered bonds, there is also a JP Morgan Chase Bank, N.A. standby bond purchase agreement which has an expiration date June 1, 2009.
The 'AAA/F1+' ratings on the variable rate series 2004A bonds are supported by a donation agreement between the Nelson Gallery Foundation and the Hall Family Foundation (Hall Foundation). The donation agreement absolutely and unconditionally obligates the Hall Foundation to make periodic charitable donations to the Nelson Gallery Foundation in amounts sufficient to enable the Nelson Gallery Foundation to pay both the principal and interest on and the purchase price of tendered series 2004A bonds.
The 'AA' long term rating on the series 2001A fixed rate bonds and 2001B variable rate bonds are supported by the Nelson Gallery Foundation's substantial level of reserves. Available funds, which represent cash and investments that are not restricted, were $179.5 million as the end of fiscal year 2005, (April 30). Operating performance for fiscal year 2006 is expected to be better than the prior year based on nine months of financial data with the change in total net assets reported to be $48 million. Available funds as of April 30, 2005 were sufficient to cover nearly 8.8 years of expenses or outstanding debt of $220 million by 0.8 times (x). No additional debt is planned for the near term. An increase in available funds to a level sufficient to cover outstanding debt by 1.2x could have a positive impact on the rating.
In addition, fundraising efforts continue to be successful and construction of the new addition to the Nelson Atkins Museum is on time and within budget and is expected to open in mid 2007. Since the completion of the last comprehensive capital campaign in Dec. 2000, which raised $223.7 million, the foundation has launched a $100 million campaign to build the endowment and has raised $81.1 million. The series 2001A are scheduled to amortize in fiscal years 2012 through 2030 while the 2001B bonds amortize over the fiscal years 2027 through 2031.
The Nelson Gallery Foundation operates and maintains the Nelson-Atkins Museum of Art located in Kansas City, MO.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
The 'AAA/F1+' rating for the Hall Foundation is supported primarily by its substantial level of unrestricted net assets, low operating costs, an appropriate investment strategy for its long term investment horizon, and lack of existing debt with no plans to issue debt or incur additional obligations related to the issuance of debt by a third party beyond the $60 million for the Nelson Gallery Foundation. The Hall Foundation is a grant-making organization required to distribute annually roughly 5% of its average monthly asset value. Each year the Hall Foundation investments generate dividend and interest income that averages approximately 3% of the value of net assets. To meet the 5% spending requirement, the investment income is supplemented by the sale of investments. Unaudited financial statements for the fiscal year ended Dec. 31, 2005 reflect total revenues of $64.2 million and expenses of $33.9 million. Approximately 80% of the expenses are related to charitable distributions. Unrestricted net assets were $814 million and were invested in equities (60%), cash and fixed income securities (21%) and alternative assets (18%). In addition to the $814 million of net assets of the Hall Family Foundation that could be used as liquidity for any series 2004A tendered bonds, there is also a JP Morgan Chase Bank, N.A. standby bond purchase agreement which has an expiration date June 1, 2009.
The 'AAA/F1+' ratings on the variable rate series 2004A bonds are supported by a donation agreement between the Nelson Gallery Foundation and the Hall Family Foundation (Hall Foundation). The donation agreement absolutely and unconditionally obligates the Hall Foundation to make periodic charitable donations to the Nelson Gallery Foundation in amounts sufficient to enable the Nelson Gallery Foundation to pay both the principal and interest on and the purchase price of tendered series 2004A bonds.
The 'AA' long term rating on the series 2001A fixed rate bonds and 2001B variable rate bonds are supported by the Nelson Gallery Foundation's substantial level of reserves. Available funds, which represent cash and investments that are not restricted, were $179.5 million as the end of fiscal year 2005, (April 30). Operating performance for fiscal year 2006 is expected to be better than the prior year based on nine months of financial data with the change in total net assets reported to be $48 million. Available funds as of April 30, 2005 were sufficient to cover nearly 8.8 years of expenses or outstanding debt of $220 million by 0.8 times (x). No additional debt is planned for the near term. An increase in available funds to a level sufficient to cover outstanding debt by 1.2x could have a positive impact on the rating.
In addition, fundraising efforts continue to be successful and construction of the new addition to the Nelson Atkins Museum is on time and within budget and is expected to open in mid 2007. Since the completion of the last comprehensive capital campaign in Dec. 2000, which raised $223.7 million, the foundation has launched a $100 million campaign to build the endowment and has raised $81.1 million. The series 2001A are scheduled to amortize in fiscal years 2012 through 2030 while the 2001B bonds amortize over the fiscal years 2027 through 2031.
The Nelson Gallery Foundation operates and maintains the Nelson-Atkins Museum of Art located in Kansas City, MO.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.