A recently priced bond issue for a Honolulu senior-living facility is the first startup continuing care retirement community financing in more than 18 months, underwriter Ziegler Capital Markets said in a news release.

The $86 million bond deal will finance 15 Craigside, a new continuing care community that will include 170 independent living apartments, 41 nursing beds, and a variety of common area amenities.

The bonds were issued for the 15 Craigside project using the Hawaii Department of Budget and Finance as a conduit issuer.

“The solid and enthusiastic response of the institutional bond market to a nonrated start-up senior living transaction is highly encouraging news for the senior living sector,” said Mary Muñoz, managing director for Ziegler. “As clients across the country are re-evaluating growth and redevelopment opportunities, Craigside’s success is a great positive indicator of market appetite.”

According to Ziegler, because of the continuing challenges in the letter of credit market, the deal was structured with short-term debt to be repaid with entrance fees, and a long-term debt structure with a mix of term bonds and its “ARROS,” or accelerated redemption reset option securities.

The average yield on the short-term debt is 7.18%, according to Ziegler, and the average yield on the long-term debt is 9.12%, with a top yield of 9.15% on the 2044 term bond.

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