Pacific Retirement Services Issues $252 million of Bonds to Finance CCRC on Arizona State University Main Campus

January 23, 2018

Pacific Retirement Services (PRS), in partnership with University Realty, the real estate affiliate of Arizona State University (ASU), closed a $252 million tax-exempt bond financing for the construction of Mirabella at ASU (MASU), a 20-story, 4-level of care, life plan community located on ASU’s main campus in Tempe, Arizona. Cain Brothers was the sole underwriter of the bonds. Cain Brothers also assisted PRS in securing seed capital to fund the project’s pre-development expenses. MASU is the third project under the Mirabella brand, PRS’s luxury, urban, high-rise CCRC concept.

Project Overview
MASU is being developed by PRS in partnership with University Realty. University Realty contributed land equity and local real estate expertise and will partner with PRS in Mirabella’s governance and marketing. The ASU affiliation will allow residents access to ASU’s wide range of academic, sporting, and cultural programming. PRS is the developer and contributed funds for start-8up capital and financial support. Both parties provided further support through the purchase of subordinated debt. PRS will operate the facility.

Financing Structure
Cain Brothers issued a record $157 million in short-term entrance fee bonds: greatly reducing MASU’s construction interest and related negative arbitrage costs. While this high proportion of entrance fee bonds had never been raised before for a new CCRC project, Cain Brothers was committed to the structure as it allowed MASU to deleverage its balance sheet quickly upon initial occupancy fill-up. $82 million of the financing was funded with publicly-issued long-term fixed rate bonds. Cain Brothers also raised $12 million of subordinated tax-exempt fixed rate bonds which reduced the amount of cash equity contributed to the transaction. Cain Brothers was ultimately able to place the $252 million of start-up debt at an average “all-in” cost of capital of 6.09%with 36 investors participating in the transaction.

For more information, please contact:

Bill Pomeranz

Managing Director
(415) 962-2954

Bart Plank

Managing Director
Co-Head Healthcare Public Finance
(212) 981-6915