Dallas-based senior living community developer Senior Quality Lifestyles Corporation (“SQLC”) announces a banner year for investment financing during 2015, with more than $254 million in new funds to fuel expansion, upgrades and refinancings for several of its Continuing Care Retirement Communities (“CCRCs”). The issuance for 2015 moves SQLC past the $1 billion mark in financing since its founding, helping to propel the company into its position as the largest nonprofit senior living provider in Texas and the 29th largest in the nation, based on rankings in the 2015 LeadingAge Ziegler 150 report.
“We understand that success in senior living revolves around more than a bottom line; it revolves around creating a culture of caring and excellence that you would envision your aging parents to experience,” said Charlie Brewer, president and CEO of SQLC. “As a nonprofit, we are able to reinvest in our residents’ life experiences and continue to create environments that are not only physically appealing and secure, but financially secure as well.”
The 2015 financing followed Fitch rating upgrades for two SQLC properties, which allowed SQLC to transact significant refundings, financings and refinancings. This has resulted in substantial savings on previously borrowed funds. Industry experts credit SQLC’s success to a proactive business management model that melds best business practices with a sustained focus on the resident experience.
“SQLC has developed a reputation for the operation of high-quality senior living communities and has been one of the more active senior living capital markets participants in the past 15 years, with over $1 billion in par amount of bonds issued since 1999,” said Rich Scanlon, managing director at Ziegler Investment Banking, the leading specialty investment banking house for nonprofit senior living companies. “The Series 2015 bonds were purchased by a total of 23 institutional investors, of which nine were ‘first time’ SQLC project buyers.” Scanlon has managed every SQLC funding since its inception in 1999.
The marketplace has rewarded this business model with sustained success, which has created demand for growth at several of SQLC’s CCRCs, including Edgemere in Dallas, The Buckingham in Houston and Querencia at Barton Creek in Austin. Each of these communities has sustained high occupancy levels and enjoyed a substantial waiting list.
Following is a more detailed description of financing activity:
In 2013 Edgemere received a Fitch Rating of BBB. SQLC secured $94 million in the form of series 2015A and 2015B bonds in May 2015 at improved rates.
The series 2015A funds will be used to refinance some outstanding Series 2006B variable rate demand bonds totaling $17.24 million, terminate an existing interest rate swap, reimburse NSHC for certain routine capital expenditures, fund certain campus improvements and additions (the “Renaissance Project”), fund interest for 23 months on a portion of the financing, fund a debt service reserve fund, and pay the cost of issuance of the Series 2015A Bonds. The Renaissance Project, financed through the sale of $36 million in series 2015A bonds, will add 30-40 new jobs to the local economy. It will include an expansion and renovation of the community, including seven assisted living units, 10 memory support units and 15 private nursing beds. In addition, a structured parking garage with 75 spaces and an approximately 4,000-square-foot performing arts center will be constructed.
The proceeds of the Series 2015B Bonds and other funds were used to refund the tendered Series 2006A Bonds, fund a debt service reserve fund and pay the cost of issuance of the Series 2015B Bonds. Annual debt service savings as a result of the tender and refinancing of the tendered bonds is approximately $132,000, resulting in a net present value (“NPV”) benefit of $2.06 million or 5.31 percent of the par amount of tendered bonds.
The Buckingham received a rating from Fitch of BB. The Buckingham subsequently secured a $109.38 million, tax-exempt, fixed-rate Series 2015 Bonds for the community in July of 2015. Proceeds of the Series 2015 Bonds will be used to fund a major expansion of the community, certain future capital expenditures, interest on the bonds for 27 months, separate accounts of the debt service reserve fund for each series of the Series 2015 Bonds and pay the cost of issuance of the Series 2015 Bonds.
Six acres of land were purchased with an interim funding of $18.6 million that closed in 2014 and also provided funds for the marketing of the planned expansion. In 2015 The Buckingham financed with the issuance of the Series 2015 Bonds and commenced the expansion consisting of the following: 106 additional independent living units, 27 additional assisted living units, 18 additional memory support units, 32 additional skilled nursing beds and an underground parking garage with 111 total spaces and an additional 292 surface level spaces.
Querencia at Barton Creek (Austin) – $50.5 Million for Renovations and Refinancing
Querencia received a BBB rating, and secured $50.69 million in tax-exempt, fixed-rate Series 2015 Bonds for the community in October of 2015. Approximately $39 million is earmarked for refinancing, resulting in annual savings of $150,000 or NPV Savings of $2.73 million or 7.23 percent. A substantial portion of the new funds—$12.5 million—will be associated with capital projects, specifically a three-phase expansion and renovation including dining areas, a town hall area and a series of improvements to existing balconies. Querencia closed the financing in October 2015.
Senior Quality Lifestyles Corporation (SQLC) is a nationally recognized nonprofit organization that sponsors and operates the life care communities of Edgemere (Dallas), The Buckingham (Houston), Querencia at Barton Creek (Austin), Mirador (Corpus Christi), The Stayton at Museum Way (Fort Worth), and The Barrington of Carmel (Indianapolis). For further information, visit www.sqlc.org, or call (469) 916-8958.