Working on behalf of a large CCRC in Germantown, Tennessee, Ziegler successfully closed a series of bank bonds for the not-for-profit sponsor. Incorporated in July 2000, the community has grown on its 27.5 campus to include 230 independent living units, of which there are 202 apartments and 28 patio homes, 32 assisted living units, 16 dementia units and 50 skilled nursing beds, along with plenty of common areas and amenities. The one-, two- and three-story buildings are also interconnected with enclosed, air-conditioned hallways.
Ownership was looking to refinance its 2012 bonds using a Cinderella Refunding structure, which consists of taxable bank debt that then converts to non-bank qualified tax-exempt debt. For this transaction, the $45.195 million in bonds will convert to a tax-exempt series in September 2022, or 90 days prior to the call date of the outstanding 2012 bonds.
Ziegler initiated the bank solicitation search on March 5 and was able to obtain terms from multiple sources, ultimately selecting First Horizon to provide the loan. The terms include a 12-year commitment period with a 27-year amortization that matches the existing 2012 bonds. The taxable interest rate will be one-month LIBOR + 1.95%, with a LIBOR floor of 0.50%, until September 2022. Using a portion of the loan proceeds, the sponsor also purchased an interest rate cap of 2.45% to mitigate the rate risk.
The sponsor will realize annual cash flow savings of $443,000 as a result of the refinance, for net present value savings of more than $4.48 million over the 12-year bank commitment period. Brandon Powell, Genia Weeks and Carolina Robertson handled the transaction for Ziegler.
