Three Pillars Senior Living Communities $50,740,000 Financing (Series 2021 A & B)

March 16, 2021

Cain Brothers is pleased to announce the successful closing of the ‘BBB+’ (Fitch) $50.7 million financing for Three Pillars Senior Living Communities, a not-for-profit organization founded in 1905 affiliated with the Masonic Grand Lodge of Wisconsin that owns and operates a CCRC in Dousman, WI.

Three Pillars consistently maintained occupancy above 96% in both its independent and assisted living facilities, but census in their 84-bed skilled nursing facility began softening in 2018 due to lack of private rooms. Compounding the marketability issue, management noted existing residents’ strong preference to receive growing higher acuity services in a more residential setting and the State of Wisconsin’s recent policy delivery and payment reform initiatives designed to disincentivize operators from providing care in larger skilled nursing settings. In response, management developed and executed a transformational renovation and expansion project that expanded assisted living and downsized skilled nursing.

Proceeds from the Series 2021A bonds funded: (1) the renovation of their healthcare center to convert 48 semi-private units with shared bathrooms into 36 private units with private bathrooms and (2) expand 20 community based residential facility (CBRF) licensed assisted living beds to 75 CBRF beds (in 69 units), thus positioning them to execute their acuity shift strategy. The Series 2021B bonds advance refunded Three Pillars’ Series 2013 bonds, which were not callable until August 2023, and reduced annual debt service by more than 20% through the Series 2013 final maturity of 2042. The refunding significantly improved debt service coverage and future debt capacity.

With rates rising 25 bps in the four days before pricing, Cain Brothers ran a highly effective underwriting process that resulted in the Series 2021A&B bonds being 3.6x oversubscribed, thus enabling rates to get tightened across the entire yield curve. The $29.4 million Series 2021A tax-exempt bonds priced at a 35-year yield of 2.94%, the lowest cost of capital in Three Pillars’ 115-year history. The $21.3 million Series 2021B taxable bonds priced at a 35-year yield of 4.19%, which was also well below their lowest historic cost of tax-exempt capital.

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