Fitch Ratings has affirmed the following ratings for Indian River County, FL.

Long-Term Issuer Default Rating (IDR) at 'AAA';

$2.9 million outstanding spring training facility revenue bonds, series 2001 at 'AA+'.

The Rating Outlook is Stable.

RATING ACTIONS

Entity / Debt

Rating

Prior

Indian River County (FL) [General Government]

LT IDR

AAA

Affirmed

AAA

Indian River County (FL) /Issuer Default Rating - General Government/1 LT

LT

AAA

Affirmed

AAA

Indian River County (FL) /State Allocation - Sales Tax/1 LT

LT

AA+

Affirmed

AA+

Page

of 1

VIEW ADDITIONAL RATING DETAILS

SECURITY

The spring training facility revenue bonds are limited obligations of the county, secured by a first lien on a statutory annual distribution of funds from the State of Florida general revenue fund for new or retained professional sports facilities. The bonds were previously secured by a pledge of proceeds from the fourth-cent tourist development tax (TDT) levied by the county and 86% of the local government half-cent sales tax distributed to the county by the state, which were released in 2021 pursuant to the bond resolution.

ANALYTICAL CONCLUSION

The 'AA+' rating on the spring training facility revenue bonds is based on Fitch's dedicated tax analysis and the structure's resilience to pledged revenues through economic cycles. The current pledged revenue supporting the bonds is the county's annual receipt of $500,004 distributed by the state pursuant to the statutory program supporting spring training facilities in the state, which provides 1.0x debt service coverage. The distribution is provided by the state from its available sales and use tax revenues, subject to a statutory distribution formula, but before the release of net sales tax revenues to the state's general revenue fund.

Sales taxes are the state's largest revenue source, approximating approximately $38 billion in fiscal 2022. The magnitude of sales tax receipts ensures more than sufficient funds to cover the state's total annual $28.5 million sales tax revenue distribution obligation for participating entities associated with the spring training facilities program. The fixed nature of the distribution and the size of the revenue source mitigate Fitch's concerns regarding very tight 1.0x maximum annual debt service (MADS) coverage and weak legal requirements, including the lack of a debt service reserve fund and the 1.0x MADS additional bonds test.

The bonds are now only payable from the statutory payment from the state's general revenue fund, following the release of the originally pledged TDT and half-cent sales tax revenues in 2021. The rating on the bonds is the lower of one-notch below the state IDR or the county's IDR, which are both 'AAA'.

The county's 'AAA' IDR reflects its exceptional financial resilience including its superior budget flexibility and high reserves in relation to expected revenue volatility through economic cycles. The rating also considers the county's very low long-term debt and retiree benefit liabilities.

Economic Resource Base

Indian River County is located on the Atlantic coastline, approximately 135 miles north of Miami, and includes the cities of Vero Beach and Sebastian. The county's population has shown steady growth with a 2022 census estimate of 167,352, up approximately 21% since 2010.

KEY RATING DRIVERS

Revenue Framework: 'aa'

Fitch expects future revenue growth will continue to trend between long-term expectations for national GDP and inflation as the tax base and population is experiencing strong growth. The county has considerable legal revenue raising ability with current millage rates well below the 10-mill statutory limit.

Expenditure Framework: 'aa'

The county's pace of spending is expected to be in line with or marginally above revenue growth trends in the absence of policy action. Fixed carrying costs associated with debt and retiree benefits are moderate, and the county's ability to cut spending through the economic cycle is solid.

Long-Term Liability Burden: 'aaa'

County debt and net pension liabilities are very low, estimated at around 2% of personal income. Liabilities are expected to remain low based on the county's participation in the Florida Retirement System (FRS), a modest level of additional debt issuance plans and rapid repayment of outstanding debt.

Operating Performance: 'aaa'

Fitch expects the county to maintain significant financial resilience in the event of a moderate economic downturn. The county has ample gap-closing ability provided by its historically strong reserves and a superior level of inherent budget flexibility.

RATING SENSITIVITIES

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

For the IDR, positive rating action is not applicable as 'AAA' is the highest rating possible on Fitch's rating scale;

For the spring training facility bonds, positive rating action is not applicable as the bonds are capped at

'AA+', one notch below the State of Florida's 'AAA' rating, which is the highest rating possible on Fitch's rating scale.

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

For the IDR, material erosion in gap-closing capacity due to sustained revenue declines or a reduction in the county's expenditure flexibility;

Expectations for weakening of revenue growth prospects to a level below inflation;

For the spring training facility bonds, a downgrade of state of Florida's IDR to below 'AAA' or a downgrade of the county's IDR to below 'AA+'.

CURRENT DEVELOPMENTS

The county has experienced continued improvement in its tax base and strong population growth the past several years and has prudently managed changes in revenues to meet expenditure growth. The county ended fiscal year 2022 (ended Sept. 30) with a net operating surplus of $11 million, leading to an unrestricted general fund balance of $79 million, or 60% of expenditures and transfers out. The positive results reflected lower expenditures compared to budget and higher than expected property and sales tax revenues.

Management reported preliminary results for fiscal 2023 that project a general fund net operating surplus after transfers of approximately $18 million, with higher than budgeted revenues primarily from investment income and lower than budgeted expenditures for transportation related expenses associated with grants not yet expended. General government operations experienced savings due to vacancies and departmental spending below budget.

The fiscal year 2024 adopted general fund budget of $132.4 million is up 1.5%, or $1.9 million, compared to the March 31, 2023 mid-year budget. The operating millage rate was maintained at 3.5475 and taxable assessed values increased 11% to $26 billion. Ad valorem tax revenues are expected to increase 13% or $10.8 million, assuming a 95% tax collection rate, as a result. Expense drivers are primarily related to county and sheriff's department personnel costs, children's services funding, the creation of new positions, and the impact of the cost increase due to state changes in retiree benefits.

The county has demonstrated robust financial management by maintaining ample reserves. Despite modest operating deficits that occurred from fiscal years 2015 through 2017, the county's unrestricted reserve levels have remained in excess of 44% of total expenditures (after transfers).

In November 2022, county voters approved, via referendum, $50 million in debt issuance to acquire environmentally sensitive lands. The county expects to issue an initial tranche of $25 million of bonds later this year to support this initiative.

County voters approved the extension of the optional sales tax beginning Jan. 1, 2019, for an additional 15 years through Dec. 31, 2034. The local option sales tax, originally approved by voters in 2016 generated approximately $26 million in revenues in fiscal 2022. The county plans to continue to use the funds to support its infrastructure and capital needs on a pay-as-you-go basis in lieu of higher amounts of debt financing.

CREDIT PROFILE

The local economy of Indian River County is traditionally centered on agriculture and tourism, although it has diversified with an increased presence of health care and information technology, light manufacturing, wholesale and retail trade and service sector jobs. The county's tax base has picked up solid momentum in recent years after enduring steep declines during the recession and a slow initial recovery. The county's unemployment rate has improved considerably but still exceeds the state and the U.S average. The tourism sector continues to strengthen, with tourist development taxes up 23% in fiscal 2022 over the prior year.

Spring Training Facility Bonds - Key Rating Factors

Strong Resilience and Solid Revenue Growth: The spring training facility bonds are ultimately supported by the state's distribution of the guaranteed entitlement to all counties from the state's available sales and use tax revenues. State sales and use tax collections are ample, with fiscal 2022 net adjusted sales tax revenues of over $35 billion available for eligible sports facility distributions amounting to significant coverage to meet the $28.5 million requirement in fiscal 2022 and supporting the structure's strong financial resilience. Fitch assesses the growth prospects of the state of Florida's sales and use tax revenues as solid and expects growth to remain at a level between long-term rates of GDP and inflation, notwithstanding the above average growth that has occurred in recent years.

Capped by State and County Ratings: The spring training facility bonds are capped at the lower of the county's IDR (AAA) or one notch below the state of Florida's IDR (AAA). This cap reflects the required distribution by the state and, that once received by the county, pledged revenues are not insulated from the county's operating risk.

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

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

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

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.

Additional information is available on www.fitchratings.com

PARTICIPATION STATUS

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 issu

28

Fitch Withdraws Spirit Realty's Ratings

Wed 24 Jan, 2024 - 3:46 pm ET

Fitch Ratings - New York - 24 Jan 2024: Fitch Ratings has withdrawn the ratings of Spirit Realty Capital, Inc. (NYSE: SRC) and its operating partnership, Spirit Realty, L.P., including its 'BBB' Issuer Default Rating (IDR) and underlying issuances outstanding, comprised of the unsecured revolving credit facilities, term loans and senior notes, as well as the preferred stock.

The rating action follows the completion of Spirit Realty's acquisition by Realty Income (NYSE: O), an acquirer and manager of freestanding commercial properties that generate rental revenue under long-term net lease agreements, in an all-stock transaction placing Spirit's enterprise value at approximately $9.3 billion. Under the terms of the deal, Spirit's common shareholders were to receive 0.762 newly-issued Realty Income common shares for each share they owned. In addition, all of Spirit's outstanding shares of Series A cumulative redeemable preferred stock were exchanged for shares of Realty Income Series A cumulative redeemable preferred stock, which will trade under the symbol 'O PR' on the NYSE. Fitch views the acquisition positively, due to Realty Income's size, scale, and low leverage.

Prior to the closing of the deal, Realty Income announced the final results of its previously announced offers to exchange all validly tendered and accepted senior unsecured notes previously issued by Spirit Realty, L.P. for new notes issued by Realty Income. The final settlement of the exchange offers was expected to take place on or about Jan. 23, 2024.

Following the close of the acquisition, Fitch will no longer have sufficient information to maintain the ratings. Accordingly, Fitch will no longer provide ratings (or analytical coverage) for SRC.

Key Rating Drivers

Key Rating Drivers are not applicable as the ratings have been withdrawn.

Key Assumptions

Key Assumptions are not applicable as the ratings are being withdrawn.

RATING SENSITIVITIES

Rating Sensitivities do not apply as the ratings have been withdrawn.

Issuer Profile

Spirit Realty Capital, Inc. is a net-lease REIT that primarily invests in single-tenant, operationally essential real estate assets subject to long-term leases. As of Sept. 30, 2023, the company's diverse portfolio consisted of 2,037 retail, industrial and other properties across 49 states, which were leased to 338 tenants operating in 37 industries. These properties were approximately 99.6% occupied.

Summary of Financial Adjustments

No material non-standard financial adjustments. Stock based compensation was considered a reduction to SG&A and an addback to EBITDA.

Sources of Information

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

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

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

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.

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