A not-for-profit CCRC in Dousman, Wisconsin is following the will of its patients and converted a number of its skilled nursing beds to community-based residential facility-licensed beds and secured financing with the help of Cain Brothers to fund it. Three Pillars Senior Living Communities, a not-for-profit founded in 1905 and affiliated with the Masonic Grand Lodge of Wisconsin, owns and operates the campus.
Occupancy was consistently above 96% across its independent living and assisted living units, but census at its 84-bed skilled nursing facility began softening in 2018 due to the lack of private rooms. Management also took notice of higher acuity residents’ desire to receive care in a more residential setting.
So, they embarked on a large renovation and expansion project to convert 48 semiprivate skilled nursing units with shared bathrooms into 36 private units with private bathrooms. They then planned on expanding its current 20 community-based residential facility (CBRF) licensed assisted living beds to 75 CBRF beds (in 69 units).
To fund these projects, Three Pillars turned to Cain Brothers and closed $50.7 million in bond financing split between a $29.4 million tax-exempt series and $21.3 million in taxable bonds. Interest rates were rising before the pricing, but the whole series was 3.6x oversubscribed, thus tightening rates across the entire yield curve.
The tax-exempt bonds were priced at a 35-year yield of 2.94%, while the taxable bonds were priced at a 35-year yield of 4.19%. Proceeds of the tax-exempt debt helped fund the renovation and expansion, while the taxable bonds advance refunded outstanding bonds that were not callable until August 2023 and helped significantly improve debt service coverage and future debt capacity.
