BB&T Capital Markets Closes $55,650,000 Financing for Crest View Senior Communities

Transaction Summary

On June 30, 2015, BB&T Capital Markets closed a total bond issue of $55,650,000 in tax-exempt and taxable bonds for Crest View Senior Communities (Crest View).  The bond proceeds will be used to finance the construction of a new campus and to create a new Obligated Group via a refinancing of existing debt.



Testimonials

While this was the first transaction with BB&T; after our experience, I am certain it is far from the last transaction. Our partnership, and it was a true partnership, with an investment banking firm that truly understands our faith based not for profit organization, was a true joy. The team at BB&T who we worked with were dedicated to assuring that they would "get the deal done", and they did so with professionalism and passion for our work, and their work. I would highly recommend BB&T.

Shirley E. H. BarnesChief Executive Officer, Crest View Senior Communities

About the Companies

Crest View is a Lutheran affiliated non-profit organization headquartered in Columbia Heights, a suburb of Minneapolis, Minnesota. The organization has a longstanding history caring for the elderly in Columbia Heights and surrounding neighborhoods since the 1950s. The existing Obligated Group prior to the Series 2015 financing included four existing senior housing entities and home health service organizations in the existing Obligated Group.

The new facility, to be known as Crest View Senior Community at Blaine, will be located in Blaine, Minnesota, about eight miles north of their current campus, but still within Anoka County. A full complement of care will be provided with 66 rental independent living  apartments, 51 assisted living apartments, 11 enhanced assisted living apartments,and 24 memory care apartments. In addition, 20% of the apartments in the Blaine project will be reserved for individuals earning 50% or less of the median area income.



Financing Structure

The original intention was to establish the new campus in 2008, and land was financed at that time. Due to the ensuing financial recession, the land remained undeveloped. Crest View, while enjoying extremely strong community support, had been affected by the recession. The community it serves, Columbia Heights, is a solid middle class neighborhood, and its housing market was deeply impacted by the downturn. Crest View, in turn, had to make certain changes in its operations, including adjusting product mix, to reflect the change in its markets.

However, the combination of carrying non-revenue producing assets (the land), expenses associated with product change, and overall economic conditions, certainly impacted its ability to accumulate equity for the new project. Crest View turned to BB&T Capital Markets after other investment banks were unable to structure a solution. BB&T determined that a new capital structure, with an expanded obligated group, would create enough future cash flow equity to accomplish Crest View's objectives. The project team coordinated a new financial feasibility study with the establishment of a new obligated group, linking the existing facilities with the proposed project. With a 1.39x forecasted coverage and 100 forecasted days cash on hand at stabilization, BB&T relayed these results, the project history, and rationale for the new structure to several potential investors.

Pricing of the bonds occurred in mid-June following the prior week's rough market environment. Fears slowly grew with the shaky geopolitical events surrounding Greece's economic instability. Through constant feedback and open communication with all parties involved, BB&T's underwriting and sales team was able to place the bonds at a 6.125% coupon in 2050 for the $54.225 million tax exempt piece and 7.000% coupon in 2020 for the $1.425 taxable piece.

The Blaine project will provide affordable care for seniors in an underserved market. With Crest View's longstanding experience and known reputation in the community, the Series 2015 bond financing will allow the project to thrive on strong financial footing for years to come.

Healthcare

BB&T Capital Markets has a highly experienced team dedicated to the healthcare industry. Our senior living group has an annual financing volume that typically exceeds $1 billion in bond issues, loans and direct placements. Our Mergers & Acquisition Advisory team has executed more than 35 transactions generating in excess of $3 billion of aggregate consideration for clients over the course of their careers.

About BB&T Capital Markets

BB&T Capital Markets offers an integrated platform of equity and debt underwriting, M&A advisory, corporate banking, and sales and trading. Headquartered in Richmond, VA, with offices throughout the US, we have specific expertise within 10 distinct industry verticals including Automotive Aftermarket; Commercial & Industrial; Education; Energy; Financial Services; Food & Agribusiness; Healthcare; Logistics & Transportation Services; Real Estate; and Retail & Consumer. Our commitment to industry expertise, combined with our resources as one of the nation's strongest financial institutions, strategically positions BB&T Capital Markets to build lasting relationships and contribute measurably to the long-term success of our clients.

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