LWC21 Let’s Hear From the Leaders Session

Thought-provoking insight was shared from exceptional leaders across the non-profit and proprietary segments of the senior living industry. In an open dialog, key developments and current trends influencing their organizations’ leadership were discussed. This was originally produced from our 18th Annual HJ Sims Late Winter Conference in February, 2021. Highlights included:

  • Crisis Management and Lessons Learned from the COVID-19 Pandemic
  • Staffing Changes During and After COVID-19
  • The Need for an Open Line of Marketing & Communications
  • Social Awareness

Resilience in Crisis/Lessons Learned

The COVID-19 Pandemic has created challenges previously  unseen. Suzanne highlighted the  importance of adaptability, and  maintaining the ability to pivot  quickly to rapidly changing  circumstances and state guidance.  Tom shared that most communities  had disaster recovery plans in  place, including Pandemic plans,  however had focused largely for  events such as hurricanes and  earthquakes, with less active  preparation for a Pandemic event.

Speaking to recovery, David said  that while slow, recovery has  started. Beyond the vaccines, there  are positive signs. For instance,  leads, tours and inquiries are  increasing. Both Watermark  Retirement Communities and  HumanGood communities have  seen a significant uptick in web traffic. David acknowledged that  recovery has been uneven across  regions, in part because of differing local rules regarding the closing of  campuses due to positive tests  among residents or staff.

Staffing Changes During and After COVID

John stated that COVID exacerbated, rather than created,  staffing challenges faced by senior  living communities. The question  facing organizations is how much  of the increase in staff expenses is  permanent and which will abate as  the Pandemic eases. Tom added he does not expect a return to pre-COVID levels, due to the lessons around infection control, greater  customer expectations and the need to increase wages to attract and  cetain staff. John pointed out better  wages for front-line health care  staff are necessary on an industry- wide basis, otherwise recruitment  will become increasingly difficult.  Suzanne added increased fees were  previously met with strong  resistance from residents. During  the past budget cycle however, as  the majority of fee increases were  funding higher staff wages,  Aldersgate encountered little to no  resistance. Others also indicated  their staff appreciation fundraising  efforts yielded record results. 


Tom discussed Benchmark’s efforts to maintain an open line of  communication with their  communities, residents and  families. In fact, throughout the  Pandemic each community has  been sending daily communications regarding the status of COVID-19 on campus. John discussed his organization’s efforts to leverage technology, such as tablets, to advance efficiency  while improving resident and team  member experience. 

Social Awareness

Suzanne shared that socially distanced marches were organized  at Aldersgate, with leadership from  staff, following the death of George Floyd. These occurred on and off-campus, were attended by staff and  residents, and even those in the  skilled nursing facility. John  offered that their internal  conversations with staff showed  that while good intentions were  recognized, they are not enough,  that people of color and  LGBTQIA+ staff are looking for  actions and outcomes. Further, it  was understood that this is a  journey, and these efforts cannot be viewed as short-term programs.  Suzanne added they should not be  called programs, as programs  eventually terminate, and these  should be permanent changes. John added that piecemeal or one-off  approaches often do more harm  than good. David pointed out that  Watermark was able to leverage  experienced gained through an  art/training reach-out effort to the  LGBTQIA+ community, called  “Not Another Second,” to  implement training around race  relations. 

For more information, please contact Andrew Nesi at anesi@hjsims.com or Curtis King at cking@hjsims.com.

For coverage on any of our other conference sessions, please visit our events page.

Panel of Industry Leaders

John Cochrane Headshot

John Cochrane
President & CEO

Tom Grape Headshot

Tom Grape
Chairman & CEO

David Freshwater
Watermark Retirement Communities

Suzanne Pugh Headshot

Suzanne Pugh
President & CEO

Replay our 18th Annual Late Winter Conference

What Do the Suez Canal and HUD Multifamily Mortgage Insurance Have in Common

by Anthony Luzzi

At first glance, that is an odd pairing, but stay with us, please.

The Suez Canal has recently been prominent in the news when a container ship became stuck, blocking the Canal and creating a massive logjam of ships at both ends.

There has been unprecedented demand for HUD’s multifamily mortgage insurance, creating logjams of applications waiting in queues across the five Regional Centers.

Demand has been fueled by historic low interest rates, notwithstanding their recent spike; more favorable loan-to-value, loan-to-cost, and debt service coverage ratios than conventional sources; non-recourse provisions that are a rarity elsewhere in the capital markets; and long-term (up to 40 years), fully amortizing structures.

In addition, there has been an increase in the popularity of the Section 223(f) refinance program since HUD eliminated the three-year rule last March that required a property to be in service for that long before it was eligible. (Special note to healthcare facility owners and operators: a similar waiver to the three-year rule may be in the offing under the LEAN program. Stay tuned for more details.)

HUD has taken several positive steps to address the situation, ensuring transparency and consistency to the application process.

First, they have established a fairly uniform screening protocol for applications before they are placed into the queue. Once an application is screened for deficiencies, a lender has five business days to respond; if the response is acceptable, the application is formally placed into the queue.

Second, once the application is in the queue, it is given a targeted date to be assigned to a HUD underwriter. The queue is generally updated weekly, so lenders and borrowers can track the progress of their deal and manage expectations along the way.

Third, HUD has revised loan priorities for assignment in the queue. They now are:

  1. Low Income Housing Tax Credit (LIHTC) deals for new construction.
  2. LIHTC deals involving new credits.
  3. Opportunity Zone transactions with a qualified investment fund.
  4. Second-stage applications involving new construction.
  5. Other affordable or broadly affordable transactions.

Applications that do not meet the priorities are assigned on a first-in, first-out basis.

The new priorities took effect on March 18. We have seen immediate benefits as one of our applications became a Priority 4 and moved up to the top of the queue, gaining about three weeks in the schedule.

For more information, please contact Anthony Luzzi at aluzzi@simsmortgage.com.

Sims Mortgage Funding, Inc. originates, underwrites, and funds loans for Healthcare, Multifamily and Hospital projects. We have completed over $2 billion in HUD-insured transactions and are an approved LEAN (healthcare) and MAP (multifamily) lender.

Market Commentary: Home is Where the Heart and Wealth Are

by Gayl Mileszko

Our homes have been our anchors, true ports in the storm of this past year, our refuge from all the uncertainty outside. They have evolved as we have, morphing into classrooms and workstations, gyms and bistros, chapels and clinics. It is said that there is no place like home, the place where our stories begin and unfold. Home is the starting place of love, hope and dreams, the place where we can go just as we are, feel safest and always belong. In these and other ways, our homes are priceless. The physical structures themselves, however, have values that can be pinpointed quite precisely and unemotionally. Let us take a look at some of the latest price tags and trends for housing because these structures, our primary residences, in most cases represent the largest percentage of all assets that we hold. 

Despite all that we have been through in this past year, it is astonishing that the U.S. housing market has remained sizzling hot with prices surging at the fastest pace in 15 years. Sales just recently cooled off as new home construction has lagged behind demand and many homeowners have elected to hold onto their houses longer. But buyers in search of better space in which to live, study and work during this pandemic have been in fierce competition for what has become a record-low supply of homes. The residential real estate market has never been tighter. Housing inventory remains at a record low of 1.03 million units, having dropped by 29.5% year-over-year. That amounts to a 1.9-month supply, well below the level said to be needed in a balanced market at six months. Properties are typically selling in 20 days, another record low.  As a result, existing home sales fell 6.6% in February and pending home sales also fell after eight consecutive months of year-over-year gains, according to the National Association of Realtors. Entry-level homes in particular remain in short supply. Median existing home prices, meanwhile, rose to $313,000, 15.8% above the comparable 2020 level, with all regions of America posting double-digit gains. First-time buyers have been responsible for about 31% of sales, and a new Zillow survey finds that these buyers are increasingly comfortable buying online. 

CoreLogic forecasts that home prices will increase by an average of 3.3% by January 2022, with only a few metro areas including Houston, Las Vegas and Miami seeing declines. The Case-Schiller 20-city index shows that Phoenix has had the fastest home-price growth in the country for the 20th straight month, at 15.8%, followed by Seattle at 14.3%. The average commitment rate for a 30-year conventional fixed rate mortgage is about 2.81%, still well below the 2020 average of 3.11%. Rates, which dropped below 3% in July for the first time ever, are expected to remain below 3.5% this year. As they rise along with prices, however, affordability becomes a key and continuing concern for many. As it is, about one in five renters is behind on rent payments and 2.8 million are in mortgage forbearance. But in the four weeks ended March 21, 39% of homes that went under contract sold for more than their list price, up from 23.9% a year earlier according to Redfin Corp. As a result, 76% of nonhomeowners in the U.S. say they have no plans to purchase a home in the next six months due not only to affordability constraints but fear that the market will turn and leave them owing more on their mortgage than their home will be worth. In the fourth quarter, some 410,000 U.S. residential properties with combined mortgage debt of $280.2 billion were underwater. Real estate data firm Black Knight reports that at least one of every 14 residential mortgages in Connecticut was delinquent or in foreclosure.

Homes with a mortgage account for about 62% of all U.S. properties and the home equity for these properties surged to more than $1.5 trillion last year, an increase of 16.2% from a year earlier. Homeowners aged 62 years and older saw their housing wealth grow by a net of 3%, or $234 billion, in the fourth quarter of 2020, according to new data from the National Reverse Mortgage Lenders Association. The increase brings senior housing wealth to a record $8.05 trillion. During the pandemic, some seniors have turned to reverse mortgages to assist with expenses, including in-home care, while others have refinanced their homes or taken out home equity lines of credit. Total cash-out refi’s surged 42% year over year in 2020 averaging $50,000 per borrower and adding up to $152.7 billion in total according to Freddie Mac. Home equity line of credit volume more than doubled to $74.9 billion in 2020 from a year earlier. Many seniors are looking in shock at area home sale prices and wondering if this is the ideal time to sell the family home and move to something smaller or perhaps better located. Prices could certainly rise further — but how much more? The market looks ripe for a correction. At some point, who will be able to pay these high prices for existing homes plus all the necessary repairs, remodeling, and refurnishing costs? The average American family in 2020 consisted of only 3.15 people. So how much interest will there be in a four-bedroom home? Maybe it is better to seize the moment and sell rather than wait until there may be no real choice. We are not getting any younger, after all. The 65-and-older population has grown by 34.2% or 13.7 million during the past decade. And more and more of us are living alone. That includes 27% of adults ages 60 and older. Do we want to be home alone for the next decade (or more) cooking and cleaning for ourselves and waiting for visitors and the occasional offer of help?

For some who have struggled in isolation during this pandemic, the thought of a safe, caring, well-managed senior living community has become very appealing. Thousands of folks in their 60’s, 70’s and 80’s are researching options on line and taking virtual tours of neighborhoods with similarly aged and active people, organized social activities, high quality dining, cleaning services, concierges, and higher levels of service when needed. Life plan communities present countless options and configurations for garden homes, cottages, and high-rise apartments, assisted living, memory care, rehabilitation and nursing facilities. At Bailey Station in Collierville, Tennessee they offer seniors a “Return on Life”. At Ingleside at Rock Creek in Washington, D.C, they attract residents with “Truly Engaged Living”.  At Broadview at Purchase College in New York, they promote “Think Wide Open Lifelong Learning”. At Sinai Residences in Boca Raton, they say “No One Does Livable Luxury Like This.”  At The Homestead at Anoka in Minnesota, they assure “It’s your life. We’re Here to Help You Live It.”

Throughout the COVID-19 crisis, life plan communities have evolved with new safety procedures, technology, and services. Many have continued with expansion and renovation plans, uninterrupted or only slightly delayed for labor or material-related reasons. Several have come to the bond markets for financing projects on a tax-exempt basis. In the past few weeks, this included Plymouth Place in La Grange Park, Illinois (“The Time and Place For You”) which sold $23.9 million of BB+ rated bonds structured with 5% coupons due in 2056 to yield 3.61%. In the secondary market, bonds issued for Ralston Creek at Arvada in Colorado traded at $89.95 to yield 6.552% (19648FCK8). Arizona’s Great Lakes Senior Living Communities’ 5.125% bonds traded at $85 to yield 6.20%. 04052TBV6 The Shelby County, Tennessee’s Farms at Bailey Station 5.75% bonds due in 2049 traded at $100.332 to yield 5.70%. 82170 KAE7 Roanoke County’s Richfield Living 5.375% bonds due in 2054 traded at par. 76982TAE8.

Unlike the corporate bond market which has seen record high yield issuance this past year, the municipal market has not seen much in the way of high yield financings and this is vexing many investment strategies. Demand for yield in this low rate environment has been insatiable.  Individuals, funds, insurers, banks, and foreign buyers cannot find enough to meet their investment needs. Prices remain extremely elevated. Among the few higher yielding deals of late, a Georgia issuer brought $439.5 million of BBB-minus rated hotel and convention center bonds to market with a final maturity in 2054 that priced with a 4% coupon to yield 2.95%. The Public Finance Authority sold $135.9 million of Ba2 rated taxable bonds for Noorda College of Osteopathic Medicine due in 2050 priced at 5.625% to yield 5.75%. The Latrobe Industrial Development Authority in Pennsylvania had a $42 million BBB-minus rated transaction featuring 2051 term bonds priced at 4.00% to yield 3.30%. The California CSCDA Community Improvement Authority brought a $112.9 million non-rated social bond issue for Moda at Monrovia Station due in 2046 that priced at par to yield 3.40%. The Pennsylvania Economic Development Authority brought a rare $75 million Caa1/CCC rated solid waste disposal financing for CONSOL Energy that was subject to the alternative minimum tax; it had a sole term bond in 2051 priced at par to yield 9.00%. The Capital Trust Agency in Florida issued $17.2 million of non-rated bonds for St. John’s Classical Academy structured with a 2056 maturity that came with a 4% coupon priced to yield 4.075%. The 2-year AAA rated general obligation bond benchmark yield currently stands at 0.15%, the 10-year is at 1.11%, and the 30-year is at 1.73%.

As we begin the second quarter of the year, technical factors continue to buoy the municipal market. Cash continues to flow into bond funds and ETFs, buying activity is at the highest levels since 2009, issuance is below average, bids in the secondary market for many bonds are strong as the gusher of federal funds is making many credits appear stronger and not much product is available. In addition, the tax chatter in Washington and several state capitals is getting louder, muni/Treasury ratios have dropped below historic averages. Economic data reports also appear to reflect a solidly recovering economy. New orders, employment, business activity, and prices all increased last month. High yield muni performance has been good: returns on the S&P High Yield Muni Index in the first quarter were +1.77%; the ICE BoAML High Yield Muni Index was up 2.1% . However, investment grade tax-exempts posted negative returns (-0.26% for S&P, -0.4% for ICE BoAML). The best performing sectors so far this year have been airport and transportation. Away from munis, markets have been volatile due to surging inflation expectations. U.S Treasuries lost 4.61% in the first quarter, and corporate bonds were down 4.49% while the Dow gained 8.2%, the S&P 500 6.1% and the Nasdaq 2.95%. Oil prices have dropped in recent days but are still up26% on the year. Gold and silver prices have fallen. Bitcoin is up more than 100%.

HJ Sims has an 86-year history of guiding our individual and institutional clients through changing markets. In addition, we have either financed, advised on, or followed the progress of continuing care communities in every major U.S. market area. So, whether you are seeking assistance with executing your investment plan, in need of a trained eye to review the credits in your bond portfolio, searching for higher yielding bonds to boost your income, looking for specific advice on how best to meet your community’s financial and capital needs, or researching suitable senior living or care communities for a friend or family member, we encourage you to contact your HJ Sims representative. We aim for amazing.

Exclusive Opportunities For Our Clients

HJ Sims Partners with Gurwin Healthcare System to Finance New Community with 55% Pre-sales


CONTACT: Tara Perkins, AVP | 203-418-9049 | tperkins@hjsims.com

HJ Sims Partners with Gurwin Healthcare System to Finance New Community with 55% Pre-sales

FAIRFIELD, CT– HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the successful closing in March 2021 of a $102.1 million financing for Fountaingate Gardens, an independent living community to be located in Commack, NY.

The Gurwin Healthcare System has been providing healthcare services to Long Island residents since 1988, through the Gurwin Jewish Nursing and Rehabilitation Center and the Fay J. Lindner Assisted Living Residences.  Gurwin Jewish Healthcare Foundation acquired land adjacent Fay J. Lindner Residences with the goal of completing the continuum of care through development of an independent living community to be known as Fountaingate Gardens. Working with Eventus Strategic Partners and Perkins Eastman, Fountaingate Gardens will initially add 129 independent living apartments and offer various services/amenities to its residents. Healthcare services will be provided at the Gurwin facilities contiguous to the community.

The Foundation donated $4 million to cover early expenses and loaned nearly $16 million for pre-development capital. It also donated the 10.5-acre site, appraised at $4.675 million. Total development costs, including the tax-exempt bonds, is approximately $113.8 million. The Foundation has committed $25.5 million to the project, providing confidence to investors and enabling the bonds to be issued with only 55% of the independent living units reserved with deposits from future residents.

The Foundation agreed to an Entrance Fee Guaranty Agreement, whereby it would advance up to $2.85 million, equal the entrance fees on six independent living units, in the event occupancy did not meet expectations upon opening. It also committed $10 million in the form of a Liquidity Support Agreement.

The $102,115,000 tax-exempt bond issue was divided into two short-term Entrance Fee Principal Redemption BondsTM series and a long-term bond series. The Series 2021C bonds ($31,000,000) will be repaid when occupancy reaches 48%. The Series 2021B bonds ($32,500,000) will be repaid when occupancy reaches 86%, expected to occur in 2023. The Series 2021A ($38,615,000) has a final maturity of 2056.

Sims closed on the Series 2021 Bonds with $10.5 million of the issue purchased by Sims’ Private Wealth Management clients and the remainder purchased by 28 institutional firms. The yield on the Series C bonds is 3.125%, the yield on the Series B bonds is 4.125% and the yield on the Series A bonds maturing in 2056 is 5.375%, demonstrating demand for the project and strength of the Gurwin name in the local market.

“With tremendous support from the Sims’ team, we successfully secured bond financing for Fountaingate, Gurwin Health’s new independent living community. Despite the challenges we faced the past year, with the impact of the pandemic, Sims found creative solutions, with a firm determination to bring this project to completion. Sims not only serves as a lender; they are a model for senior housing and development. They embrace the same goals that we have as a healthcare provider: caring, quality and excellence. Thank you, Sims for all you have done to help secure the future for our community,” said Stuart Almer, CEO, Gurwin Healthcare System.

Financed Right® Solutions—Andrew Nesi: 203.418.9057 |  anesi@hjsims.com


ABOUT HJ SIMS: Founded in 1935, HJ Sims is a privately held investment bank and wealth management firm. Headquartered in Fairfield, CT, Sims has nationwide investment banking, private wealth management and trading locations. Member FINRA, SIPC. Testimonials may not be representative of another client’s experience. Past performance is no guarantee of future results.  Facebook, LinkedIn, Twitter,  Instagram.