TRANSCRIPT OF CONFERENCE CALL

Transcription

1 TRANSCRIPT OF CONFERENCE CALL Williamsburg Landing, Inc. (the "Company") is the obligated party with respect to the Bonds listed on Exhibit 1 hereto. The Company conducted a conference call on February 17, 2012, at 10:00 A.M. Eastern Time. A transcript of such conference call is attached as Exhibit 2 hereto. Dated: February 20, 2011 WILLIAMSBURG LANDING, INC. 1

2 Exhibit 1 Industrial Development Authority of Mathews County, Virginia, Revenue Bond (Williamsburg Landing Project), Series 2012 Industrial Development Authority of Mathews County, Virginia, Revenue Bonds (Williamsburg Landing Project), Series 2011A and Series 2011B Economic Development Authority of the City of Williamsburg, Virginia, Revenue Bond (Williamsburg Landing Project), Series 2007 Industrial Development Authority of Mathews County, Virginia, Revenue and Refunding Bond (Williamsburg Landing Project), Series 2007 Economic Development Authority of James City County, Virginia, Residential Care Facility First Mortgage Revenue and Refunding Bonds (Williamsburg Landing, Inc.), Series 2005 CUSIP Principal Amount Maturity Date 47029W AD9 $ 15,000 09/01/ W AE7 15,000 09/01/ W AF4 15,000 09/01/ W AG2 25,000 09/01/ W AH0 30,000 09/01/ W AJ6 35,000 09/01/ W AK3 40,000 09/01/ W AL1 45,000 09/01/ W AM9 50,000 09/01/ W AN7 55,000 09/01/ W AP2 60,000 09/01/ W AQ0 70,000 09/01/ W AR8 8,025,000 09/01/ W AT4 1,195,000 09/01/ W AS6 8,310,000 09/01/2034 Economic Development Authority of James City County, Virginia, Residential Care Facility First Mortgage Revenue and Refunding Bonds (Williamsburg Landing, Inc.), Series 2003A CUSIP Principal Amount Maturity Date 47029P BB7 $ 1,305,000 03/01/ P BC5 1,370,000 03/01/ P BD3 1,445,000 03/01/ P BE1 1,515,000 03/01/ P BJ0 3,285,000 03/01/ P BF8 12,470,000 03/01/ P BG6 14,865,000 03/01/2032 2

3 Exhibit 2 TRANSCRIPT OF WILLIAMSBURG LANDING CONFERENCE CALL DATE AND TIME: February 17, :00 A.M. EASTERN TIME CONFERENCE CALL OPERATOR: Good day ladies and gentlemen, and welcome to the Williamsburg Landing investors conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will be given at that time. If anyone should require assistance during the conference, press * then 0 on your touchtone telephone. As a reminder, this conference call is being recorded. I would like to introduce your host for today's conference, Mr. Ben Puckett. Mr. Puckett, you may begin. MR. PUCKETT: Good morning. Welcome to our conference call for Williamsburg Landing investors and their representatives, covering the fourth quarter 2011 finances and activities here at the Landing. As she said, I m Ben Puckett, Executive Vice President and Chief 3

4 Operating Officer. With me are Nancy Harrison, Vice President and Chief Financial Officer, and Paul Gerhardt, Corporate Counsel. Our President and CEO Steve Montgomery is traveling today and may be able to dial in but will not be presenting. The purpose of today s call is to provide investors with updated information about the structural issues in the Landing Building, and to provide fourth quarter and year-end 2011 financial information. We will review prepared remarks, and following that we ll respond to questions. Please note that on February 14 th we posted on EMMA the fourth quarter unaudited financials. We have reported in previous calls on the structural issues in the Landing Building, the main building on our campus, with 59 apartments, offices, shops, meeting rooms, and our two dining centers. The first of three phases of the remediation project began on October 31 st and will run through the late summer of The second phase... (we're referring to the remediation portion as the second phase) consists of installing the remaining column support collars, as well as the application of fiber-reinforced carbon-polymer fabric strengthening material directly to both sides of the floor slabs' surfaces, followed by renovation and upgrading of the affected areas. 4

5 We ve entered into a guaranteed maximum price contract with Henderson, Inc., in the amount of $17,939,610, which is a decrease of approximately $500,000 from the prior budget estimate. A contractoroperated safety program has been implemented, and no one is allowed on site without completion of safety training. Work processes, including submittal reviews and approvals via a FTP site, are in place. Phase one construction consists of renovation and expansion of the Cove Café as well as the east end of the basement, a portion of the main lobby and the west wing retail corridor and 16 apartments on three floors on the west side of the building. Residents in the west side have been relocated to available apartments elsewhere in the building. Currently, due primarily to excellent weather and Contractor performance, we are several weeks ahead of schedule on the Cove expansion and the other areas are moving on or ahead of schedule. Phase one is projected to finish in late June. Phase two will include the main dining room, the remainder of the lobby, the east wing corridor and 19 additional apartments. The newly renovated Cove dining room will serve as the dining venue for all residents during the closure of the main dining room. 5

6 We are carrying a total project capital budget of $25.2 million, plus $1.125 million in additional operating costs that will be spread over the life of the project. Financing of the project is completed. We closed two bank-qualified tax-exempt bonds with TowneBank a $10 million issue on December 15 th and a $7.5 million issue on January 25 th. This new debt was issued as additional indebtedness under the existing master trust indenture and is on parity with the current long-term debt. The new debt is not secured with a debt-service reserve fund. The new debt is structured to produce a level debt service with principal payments beginning in 2013 and ending in The bank does not have the right to call the debt except following an event of default. The Landing will draw the debt down as funds are needed during the construction period to avoid any interest-carrying costs. To date, slightly over $200,000 has been drawn down. Interest on the debt is based on a formula tied to LIBOR and Treasury rates. The Landing will have the option to keep some of the debt at a floating rate or convert some or all of the debt to a fixed rate with reset periods ranging from 3 to 10 years. Based on current rates, the floating rate is 2.9% and the fixed rates will vary from 3.5% to 4.3%, depending on the reset period selected. The 6

7 formula for resetting rates is based on a 10-year moving average of Treasury rates, which lessens the risk to the Landing if interest rates increase significantly. For this year, 2012, based on the anticipated construction costs and timing during the year, we expect to draw down about $7.2 million of the $17.5 million. Capitalized interest costs for the new debt this year (based on an average outstanding balance during the year of about $2.5 million) is projected to be $41,000. Once fully funded, the new debt is expected to add approximately $950,000 to the Landing s maximum annual debt service. The budgeted debt coverage ratio for 2012, based on the projected new maximum annual debt service, is And I will now ask Nancy Harrison to report on the 2011 unaudited financial results. MS. HARRISON: Thanks Ben. We have posted management s unaudited report for the year ending December 31st. Please refer to that report for more detail. I will highlight a few key items. Net income year to date is $1.38 million, compared to a budget of $779,000. Included in net income are realized capital gains of $317,000. Income available for debt service was $7.57 million, resulting in a debt coverage ratio of The debt coverage covenant is

8 Entrance fees net of refunds were $3.06 million, compared to a budget of $4.08 million. The lower net entrance fees were due to a combination of two less move-ins compared to budget and a greater number of refunds caused by deaths. Days cash on hand at the end of December is 385 days, compared to 411 days budgeted. The decrease is due to initial project costs of $2.6 million incurred to date. The financing plan calls for equity contributions of $7.5 million, which we will spend before drawing any further debt. Unrestricted cash and investments to longterm debt is 35.5% compared to the 39.1% budgeted. As of December 31st, we have $22.9 million in unrestricted reserves. Turning now to occupancy and sales, independent living occupancy for the calendar year was 89%, compared to a budget of 90%. At year end, occupancy was 89.4%. As of December 31 st, occupancy outside the Landing Building, not including pending sales, was 95%. Inside the Landing Building, 20 of the 59 units were vacant. We expect that there will be sufficient vacancies to provide temporary living arrangements for all Landing Building residents throughout the construction period. We expect to reopen admissions to the Landing Building in late 2012, based on the number of openings not needed for temporary housing. The 2012 budget is based on twenty- 8

9 five move-ins. To date we have five scheduled move-ins: one in February, three in March and one in May. That concludes my part. I ll turn it over to Ben. MR. PUCKETT: Thank you Nancy. This concludes our prepared remarks. In summary, we achieved financial results for 2011 in line with our budget and met all required covenants. Construction started on schedule. The first group of residents has been relocated and plans for the second group are in place. Financing for the project has been completed with favorable terms. A GMP contract has been executed at a lower than projected cost. Work processes, reporting mechanisms and monitoring tools are established, and quality control and monitoring processes are in place. We will now take questions and attempt to answer them. If we cannot, we will look to post the answers within the week or as soon as we can get an answer. And that concludes our formal remarks. CONFERENCE CALL OPERATOR: Ladies and gentlemen, if you have a question at this time, please press * then 1 on your touchtone telephone.... And our first question comes from Marie (last name omitted) from MSP Reports; your line is open. 9

10 FIRST CALLER: Hi. Thank you. Nancy, you say you've got twenty-five move-ins for What are you assuming for turnover in 2012? MS. HARRISON: Twenty-four. FIRST CALLER: Twenty-four; okay. And the... could you confirm for me, you plan to post the 2012 budget within the next few days? MS. HARRISON: Yes, we do. FIRST CALLER: Okay, that's great. That's all I have. Thank you. MS. HARRISON: Thank you. CONFERENCE CALL OPERATOR: And our next question comes from Julie (last name omitted) from BB&T Capital Markets; your line is open. SECOND CALLER: My question was answered. Thank you. CONFERENCE CALL OPERATOR: Once again, ladies and gentlemen, if you have a question at this time, please press * then And I'm showing no further questions... you may continue. MR. PUCKETT: Okay. I guess that about wraps it up. Thank you for your time and attention. [End of Conference Call] 10