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Presbyterian Retirement Communities new financing for presbyterian retirement communities provides flexible bond covenants Presbyterian Retirement Communities, Inc. (“PRC”) and its affiliate Westminster Retirement Communities, Inc. own and operate 20 CCRC and rental retirement communities located in the state of Florida. In 2003, Sims was selected to underwrite financing to repay an existing line of credit, to reimburse the company for costs of recent acquisitions and to provide funds for expansion at two properties. The 2004 financing would be the first long-term bond financing for the organization and contained minimal liquidity and debt service coverage covenants. Prior to the July 2004 financing, the organization had approximately $38 million in outstanding variable rate first mortgage bonds issued in 1998, supported by a bank letter-of-credit which was secured by certain of the CCRC properties. In addition to the bonds, PRC had a substantial line of credit provided by the same bank. The bonds were tied to two swap agreements that would have cost a significant amount to terminate under existing market conditions. Working with Sims, management of PRC determined to develop a plan of finance that would allow the 2004 Bonds to be issued on a parity basis with the 1998 Bonds, allowing the swaps to remain in place; the result was a newly-formed obligated group consisting of ten CCRC properties, the Westminster Retirement Communities Foundation and Westminster Services, Inc. After negotiation with the provider of the 1998 letter-of-credit and upon formation of the obligated group, the 2004 Bonds were issued as parity obligations with the 1998 Bonds, secured by a first mortgage on the assets of the obligated group properties and a pledge of revenues. The 2004 bonds were issued through the St. Johns County Industrial Development Authority and consisted of $31,500,000 of tax-exempt long-term fixed rate bonds and $12,000,000 taxable variable rate demand bonds supported by a letter-of-credit. Because of the company’s strong operating history and conservative strategic plan, the fixed rate bonds achieved an investment grade rating from Fitch. The bonds, marketed to Sims’ retail and institutional investors, were issued in maturities from 6 to 30 years, at yields ranging from 4.75% to 5.8%. |
