DALLAS — The HFDC of Central Texas Inc. plans to issue $58.2 million of retirement facility revenue bonds in three series Tuesday on behalf of the of the Village at Glennloch Farms.
Ziegler Capital Markets is sole underwriter for the negotiated sale. McCall Parkhurst & Horton serves as bond counsel.
The deal includes $35.7 million of Series 2006A fixed-rate bonds, $1 million of Series 2006B-1 and $1 million of Series 2006B-2 extendable-rate adjustable securities, and $20.5 million of Series 2006C variable-rate demand bonds.
Rich Scanlon, managing director with Ziegler, said these types of issues are structured with short-term, intermediate and long-term debt simply to meet demand.
“The past few deals of this type that we’ve been a part of have been extremely oversubscribed, as there is tremendous demand for these bonds,” Scanlon said.
He said this structure allows for different covenants for each series of bonds, which in turn appeals to different investors and also helps drive down the capital costs for the issuer.
Mike McDaniel, head of institutional sales and trading with Ziegler, said these bonds — despite being unrated and uninsured — tend to attract buyers simply because there isn’t much debt coming to market in the yield-oriented sector.
McDaniel added that high-yield funds view these bonds very positively and consequently they fare well in the market.
The $20.5 million of Series 2006C variable-rate demand bonds, for instance, are expected to be repaid within three years from the time of financing with the revenue generated from initial entrance fees to the community.
As of Oct. 31, the facility had received entrance-fee deposits for 80 of the independent-living units, or about 65% of capacity.
Scanlon said the pool of revenues from these fees now stands at about $30 million.
The entrance fees ranged from $159,000 for a one-bedroom apartment to $359,900 for a cottage prior to the beginning of construction. The entrance fees have been adjusted now that construction began in early November and will be adjusted again when residents take first occupancy.
The nonprofit HFDC was created by the central Texas city of Hubbard to sell bonds to finance development of qualified health facilities.
The Village at Glennloch Farms, which is about 28 miles north of downtown Houston, will have 20 cottages, 103 independent-living apartments, 30 assisted-living apartments, 18 “memory-support” assisted-living suites, and 35 nursing beds.
Scanlon said Ziegler may be lead manager for a similar bond issue on behalf of another senior community in Texas late in the first quarter or early in the second quarter of 2007.
