Fixed Rate Revenue Refunding Bonds

Transaction Summary

On October 19, 2016, BB&T Capital Markets closed a $27,110,000 Series 2016 Fixed Rate Bond Issue to retire Wesley Commons’ existing Series 2006 Fixed Rate Bonds.

BB&T worked with Wesley Commons and Ascension Capital Enterprises on the refinancing of Wesley Commons Series 2006 Bonds. The team decided to extend the maturity of the bonds by five years to create additional debt capacity. As pricing approached in early October, BB&T revised the bond structure to eliminate serial bonds in favor of a term bond with a premium structure, thus increasing the savings realized by Wesley Commons. Despite market turmoil on the day of pricing that caused the major market index to move up seven basis points, BB&T was able to successfully price the transaction without having to adjust interest rates. Wesley Commons ultimately received an all-in-cost of 4.59 percent and will save approximately $440,000 on an annual basis from 2017-2036 as a result of the refinancing.

Testimonials

The BB&T Capital Markets team meshed well with our strategic and operational teams and operated as a partner with our financial advisor in our quest to navigate through a very complex and sophisticated array of projects. While this refunding was a significant component of the Capital Formation Process at Wesley Commons, it was not the only component. I remained impressed with the dedication, insight and collaboration BB&T provided as we developed very unique and aggressive financing options. The partnership between BB&T Capital Markets, our advisor and Wesley Commons helps maintain an environment where Wesley Commons will continue to provide exceptional services of value to our consumers, while continuing to leverage our focus on stewardship.

David BuckshornPresident and CEO of Wesley Commons

About the Companies

Wesley Commons is a non-profit CCRC locacted in Greenwood, South Carolina and currently consists of 194 independent living apartments and cottages, 46 assisted living units, and 102 skilled nursing beds.

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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  • Wesley Commons

    On October 19, 2016, BB&T Capital Markets closed a $27,110,000 Series 2016 Fixed Rate Bond Issue to retire Wesley Commons’ existing Series 2006 Fixed Rate Bonds.

    BB&T worked with Wesley Commons and Ascension Capital Enterprises on the refinancing of Wesley Commons Series 2006 Bonds. The team decided to extend the maturity of the bonds by five years to create additional debt capacity. As pricing approached in early October, BB&T revised the bond structure to eliminate serial bonds in favor of a term bond with a premium structure, thus increasing the savings realized by Wesley Commons. Despite market turmoil on the day of pricing that caused the major market index to move up seven basis points, BB&T was able to successfully price the transaction without having to adjust interest rates. Wesley Commons ultimately received an all-in-cost of 4.59 percent and will save approximately $440,000 on an annual basis from 2017-2036 as a result of the refinancing.

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    On May 29, 2014, BB&T Capital Markets closed a nonrated $28,615,000 tax-exempt fixed rate financing and $1,000,000 taxable fixed rate financing for Zerga Development, LLC, and Zerga Management, LLC, a for-profit developer and manager of traditional multifamily housing and hospitality projects. The primary purpose of the financing was to provide funds for the construction of Silver Creek St. Augustine, an assisted living/memory care facility to be located in St. Augustine, Fla. BB&T Capital Markets, through its expertise with non-rated senior living credits and familiarity with healthcare and housing bonds, was able to utilize a form of housing bonds to provide the construction financing for Silver Creek St. Augustine. Through a combination of tax-exempt and taxable bonds, local grants and economic support, as well as defined deferral and subordination mechanics of the management and development fees, BB&T was successfully able to market and place the bond to nine institutional investors along with a strong retail distribution. BB&T Capital Markets was able to leverage its industry leading distribution capabilities and established relationships with institutional buyers to broaden Zerga’s geographic offering and continue their planned growth initiatives.

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  • Kendal on Hudson

    On May 7, 2014, BB&T Capital Markets closed an $18,000,000 Bank Financing for Kendal on Hudson ("Kendal on Hudson"), which operates a not for profit retirement community in the village of Sleepy Hollow, New York. Proceeds of the financing financed KoH's Project Renew (as described below). The completion of this financing marked the successful conclusion of KoH’s multi-step capital formation strategy. After the successful closing of the Series 2013 refinancing, BB&T Capital Markets ("BB&T") continued to work with KoH to formulate the financing plan for "Project Renew". Project Renew is primarily a repositioning of KoH’s assisted living and skilled nursing health center. The project components will include the addition of 13 safe and secure memory support units (certified as Special Needs Assisted Living Residence or “SNALR”). Of the 13 units, 6 will be certified as Enhanced Assisted Living Residence (“EALR”) in order to allow aging in place. KoH will also add 10 assisted living beds which will all be certified as EALR. Project Renew will also renovate several areas on campus including the fitness/wellness center, resident care center, and outpatient therapy suite. BB&T presented KoH with several financing alternatives, which included both bond and bank financing for Project Renew. Based on the anticipated availability and attractiveness of bank financing, BB&T coordinated a bank solicitation process that included 17 regional and national commercial banks. The solicitation received strong interest from multiple banks in the market. BB&T assisted KoH in the evaluation process of the bank proposals as well as providing a fixed rate bond option. Ultimately, KoH opted to move forward with bank financing and to work with First Niagara Bank, whose proposal was the most attractive, based on "all-in" cost of financing, length of bank commitment, along with loan covenants and terms. KoH was able to secure a "naturalv fixed rate of 3.34% with a 10-year put provision and final maturity (and amortization) of 25 years. Amidst the Project Renew financing process, KoH also faced its first annual Fitch rating surveillance review. BB&T worked with KoH to frame the positive impact of the $18 million financing and $3.5 million of equity contribution towards Project Renew on the projected financial ratios and emphasize Management's continued marketing and operating initiatives. Consequently, Fitch affirmed the “BBB”rating (stable outlook), citing the organization's solid historical occupancy, operating profitability, and liquidity and its relationship to Kendal Corporation, the parent organization. In addition, Fitch views KoH's strong independent living occupancy and waitlist demand as a primary credit strength. Although Project Renew presents an elevated debt burden and construction risk, Fitch noted that the project will provide for a wider array of healthcare services. The successful completion of the Series 2014 Bank Loan was an important milestone for KoH, enabling KoH to solidify its long-term capital structure with a new committed banking partner. Kendal on Hudson is now better positioned to serve the aging community in Westchester County, NY.

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