Client Background: Annapolis Life Care is a Maryland non-profit corporation which owns and operates a continuing care retirement community in Anne Arundel County, Maryland, known as "Ginger Cove". Ginger Cove was developed in two phases between 1987 and 1990. Today, the Community comprises 243 independent living units, 30 assisted living units and 61 nursing beds and is located on a large waterfront property in the heart of Annapolis. Since its founding, the Community has operated consistently at over 95% occupancy. This has allowed for ALC to maintain a relatively strong balance sheet and is one of the only investment-grade CCRC operations in Maryland.

Project Overview: As part of ALC's mission, it has sought to maintain state-of-the-art facilities for its residents.  In that regard, in March, 2007, ALC began pursuing a master plan project and engaged Wye River Group to serve the Community as financial advisor. ALC's master plan comprised the following:

• The modernization of ALC's health center
• The implementation of various technologies and systems to enable wireless emergency nurse call and voice communications; video surveillance; wander management; electronic charting; personal health records; medication monitoring; and other point of care/service technologies
• The improvement and expansion of ALC's dining, meeting, recreational and fitness facilities and related amenities

Financing Overview:  Due to the conservative nature of ALC's Board of Directors, it was important that its Series 2007 Bonds were structured with a long term, fixed interest rate. Once engaged, Wye River Group drafted a Request for Proposal, Finance Plan, and a robust Financial Model and contacted select investment banking firms which specialize in fixed rate bonds for CCRCs. WRG interviewed select underwriting candidates and recommended the engagement of a firm with a strong Maryland retail banking effort in order to maximize the price competition for ALC's bonds. ALC's underwriter and WRG analyzed the operations and finances of ALC and determined that an investment grade credit rating was both achievable and advantageous for ALC given its desired structure for its bond offering.  In May 2007, ALC received a BBB+ credit rating from Standard and Poor's and its financing was scheduled to be completed within a matter of months.  However, in the intervening period, interest rates for fixed rate bonds rose significantly and a conventional fixed rate bond structure was no longer desirable. ALC's underwriter and WRG examined alternate financing structures and briefed ALC's Board and Finance Committee of its options with respect to its financing. A variable rate demand bond structure was chosen and a second RFP Package was distributed to select commercial banks with letter of credit capacities. With the Board's desire for fixed rate debt in mind, WRG also competitively solicited an interest rate swap to create a synthetic fixed rate on ALC's bonds.  The result was a cost of capital far below prevailing BBB- fixed rates at the time.