Lutheran Services for Aging completes financing deal

Salisbury-based Lutheran Services for the Aging has completed a massive long-term financing package with BB&T Financial.

The $27 million bank-qualified tax-exempt package is one of the first in the state made possible through the American Recovery and Reinvestment Act of 2009.

Funds will be used to construct a new nursing home in Wilmington, purchase property in Hickory for future expansion and provide long-term financing for Lutheran Services' purchase of the Elms at Tanglewood in Clemmons.

The financing — a process involving Lutheran Services, BB&T, BB&T Capital Markets, and authorizations by the N.C. Medical Care Commission and the N.C. Local Government Commission — was in development for more than a year.

"Our partnership with BB&T will allow us to continue our mission and our strategic plan to serve elders in North Carolina," said Ted Goins, president of Lutheran Services. "We want to serve more people, but only when we can do so through good stewardship and conservative strategy."

As a component of the federal stimulus bill, the bank-qualified bonds encourage banks to provide financing for "shovel-ready" projects.

John Franklin, managing director of BB&T Capital Markets, said, "Bank-qualified tax-exempt debt is a good financing alternative for 501(c)(3) not-for-profit organizations like LSA because it allows access to attractive interest rates associated with tax-exempt obligations without some of the risks inherent in others forms of tax-exempt debt.

"In addition, there are reduced costs of issuance associated with bank-qualified debt. The advantages of this type of capital, combined with LSA's current capital needs and LSA's excellent record of financial stability made LSA a perfect candidate for the program."

Annette Conrad, Lutheran Services' chief financial officer, said the group secured "very favorable terms" including an interest rate of about 2 percent.

"Low interest, tax-exempt financing allows LSA to put more money into care and services instead of interest and administrative costs," Conrad said,

Since its incorporation in 1960, Lutheran Services for the Aging has grown from one small nursing home into a major corporation with nearly 1,100 employees serving nearly 1,300 seniors daily across the state. It has an annual budget of more than $66 million.

"Although we have become a very large service provider, we are, first and foremost, a ministry and it is to that end that we strive to expand our mission of service to older adults across the state," said Goins. "Financing helps LSA provide the basics. The generosity of foundations and our dedicated donors allows us to provide the care our elders deserve, and to provide the seed money for new programs and growth."

Lutheran Services for the Aging now operates five nursing homes, two retirement communities, one free-standing assisted living residence, an adult day services program, geriatric care management, and information and referral services.

Over the next five years, Lutheran Services is slated to construct four new nursing homes and to expand its home and community-based services at a cost expected to exceed $74 million.