A not-for-profit CCRC in Michigan is embarking on an independent living expansion and worked with the team at Ziegler to secure a bank bond financing to fund it. Located in the affluent suburb of East Grand Rapids, the CCRC was originally built in 1960 on a 20-acre campus. It currently consists of 170 entrance-fee independent living units, 20 rental IL units, 46 assisted living units, 35 memory care units and 29 skilled nursing beds. Recently, ownership purchased a medical office building on the northeast corner of the campus but has plans to demolish it and build 26 new independent living units with underground parking, communal areas on each floor and an outdoor patio/entertaining space. Mindful of Michigan winters, the building will be connected to the rest of the community by an enclosed walkway. While the project is going on, the community will also renovate the existing salon, fitness center and dining lounge. Greenbrier will act as development consultant for the projects.
Ziegler initiated a competitive bank solicitation and obtained commitment terms from seven different providers, ultimately selecting BBVA. Issued as additional indebtedness under the CCRC’s existing Master Trust Indenture, the bank bonds were structured as non-bank qualified tax-exempt debt with a 12-year bank commitment period and three years of interest only, followed by a 27-year amortization. They included a $9.8 million long-term component with a 30-year amortization and a $12.7 million short-term loan with a three-year amortization that will be retired with the initial entrance fees from the new units. The tax-exempt interest rate came to 79% of one-month LIBOR + 1.25%, with the CCRC implementing a forward-starting swap at 2.004% on the long-term debt component for the period between March 1, 2022 to July 1, 2032.
