DALLAS – A Michigan-based senior housing developer and operator is borrowing $69.3 million of unrated tax exempt and taxable bonds to finance projects in Waterville, Ohio, and Chesterton, Ind.
The bonds are scheduled to be issued on October 23 and are being sold under one offering statement by two conduit issuers.
Bank of America Merrill Lynch is senior manager.
StoryPoint of Waterville, a facility that will hold 136 living units, will be financed with the issuance of $26.8 million senior, tax-exempt bonds and $7.5 million of subordinate tax-exempt bonds. The bond offering also includes a $425,000 taxable piece.
Toledo-Lucas County Port Authority is the conduit issuer.
StoryPoint of Chesterton, with 162 living units, will be financed with proceeds of the $27 million of senior, tax-exempt debt and $7.6 million of subordinate, tax-exempt bonds.
The town of Chesterton is the conduit.
The senior bond maturities range from 2023 to 2046. The subordinated bonds are structured with maturities ranging from Jan. 15, 2047 to Jan. 15, 2050 and the taxable portion of the bond issuance matures on Jan. 15, 2022.
The bonds are secured by the revenue of both projects and are highly speculative and involve a high degree of risk according to the preliminary offering statement.
Initially, the Waterville and Chesterton project will serve as the only members of the obligated group, but two similar projects, which will begin construction before the end of the year, may be added to the obligated group in a subsequent offering.
"We are in the process of developing two more communities in Fairfield, Ohio and Fort Wayne, Indiana," said Mark Murphy, Chief Investment Officer at CSIG Holdings, the parent company of StoryPoint, in an investor presentation. "The projects will be financed under a similar structure to Chesterton and Waterville and will become part of their obligated group and added as collateral."
Murphy said that CSIG's track record shows it's an experienced developer in the Senior Housing space. CSIG acts as developer, manager, obligor and construction completion guarantor. CSIG has three other companies under its umbrella: Empower HR, CorsoCare and Communications Builders.
The company has used the used the same architect over last three projects and same general contractor used over the last 8 projects.
"The Chesterton and Waterville will be the sixth and seventh time that we have essentially deployed the same building and operating prototype over the last three years," said Murphy. "This consistency means that we have worked out the kinks out of the design which helps control costs and construction on time."
CSIG has significant liquidity and the ability to support project through economic cycles. The company has $41 million in cash and investments and combined annual revenues exceeding $80 million.
Since 1995, CSIG have developed a total of 19 senior living communities in Michigan and Ohio. The current portfolio occupancy is 91% and the three year average occupancy is over 92%. The company currently serves more than 2000 seniors and their families in Michigan and Ohio.
