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August 16, 2015
Cain Brothers underwrote $27,635,000 The Hospital Facility Authority of Polk County, Oregon Revenue Bonds Series 2015A and Series 2015B for Dallas Retirement Village. Dallas Retirement Village (“DRV”) is a multi-level senior living facility in Dallas, Oregon managed by Life Care Services and featuring 45 independent living garden homes, 73 independent living apartments, 65 assisted living units, 20 memory care units and 121 skilled nursing beds.
The proceeds from the Bonds will be used to construct 40 new lodge-style independent living apartments and a 21,000 square foot lodge clubhouse including various new amenities for the DRV campus, as well as refund $2.5 million of existing debt. Planning for the campus expansion began in 2007, but was placed on hold during the recession. While the expansion project was on hold, Cain Brothers assisted DRV in refinancing the FHA-insured debt secured by the healthcare center on campus, which reduced annual debt service by more than $350,000 and improved the financial support for the expansion project. In 2012, LCS Development joined the expansion project team to provide leadership and coordination of the development, construction and marketing activities. Cain Brothers worked closely with Management and the Board throughout the extended development period to evaluate both variable rate and fixed rate options for funding the campus improvements and the refinancing.
The financing successfully navigated the unusual legal structure of the campus, which has a number of distinct parcels based on the level of care, each with its own lender and reporting requirements.
In order to achieve a low cost of borrowing, the Series 2015B Bonds were issued as short-term accommodation fee bonds with a true interest cost of 4.6%. Cain Brothers achieved a low overall true interest cost of 5.4% and a spread to the 30-year AAA benchmark of 232 basis points which compares favorably to 239-360 basis point spreads for recent expansion and start-up fixed rate financings for senior living projects in the Pacific Northwest. With a 35-year final maturity, this financing provided DRV with a very attractive and stable capital structure.
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