“The decisions we made regarding divestiture and refinancing were critical to securing the future of Brooke Grove. HJ Sims was an invaluable partner, guiding us through every step of the process with deep industry knowledge and a strategic approach. David Saustad and Aaron Rulnick, along with the entire HJ Sims team, worked tirelessly to ensure we achieved the best possible outcome for our organization and those we serve. Their expertise in navigating complex financial transactions, coupled with their commitment to our mission, allowed us to make informed decisions that strengthened our financial foundation. Thanks to their leadership and dedication, Brooke Grove is now positioned for long-term success and continued service to our community.” — Keith T. Spillane, CFO Brooke Grove Foundation
RIGHTSIZING, RESTRUCTURING, AND REFINANCING AS A PATH TOWARD REPOSITIONING
Partnered Right®
The Brooke Grove Foundation (“Brooke Grove”), owns and operates Brooke Grove Retirement Village (“BGRV”), a life plan community located in Sandy Spring, Maryland, which includes 40 independent living units, 108 assisted living and memory support units, and 190 skilled nursing beds. Initially founded in 1950, Brooke Grove grew to own and operate Williamsport Retirement Village (“Williamsport”) in western Maryland, as well as Rest Assured Residential Living (“Rest Assured”) in Meyersdale, Pennsylvania. Williamsport included 42 assisted living units and 128 skilled nursing beds, while Rest Assured operated 33 assisted living and memory support units.
Coming out of the COVID-19 pandemic, Brooke Grove, like many healthcare providers, faced occupancy and staffing challenges across its communities. The challenges were particularly persistent at its Williamsport and Rest Assured communities. Ultimately, Brooke Grove decided that divesting of the two communities would position the organization and its main campus in Sandy Spring for future success. The proceeds from the sales would allow the organization to pay down debt and add cash to its balance sheet.
Brooke Grove ran a competitive solicitation process to assist with the sale process of the two communities. They selected HJ Sims to provide brokerage services and solicit offers for the two communities. Simultaneously with the divestiture process, Brooke Grove was also interested in exploring a new lending and banking partner. Brooke Grove also engaged HJ Sims to assist with securing a replacement lender following the completion of the divestitures.
Structured Right®
Divestiture
In late 2023, Sims solicited a broad range of for-profit and not-for-profit senior living providers for the sale of Williamsport and Rest Assured. Given the type of assets offered (mostly health care), Brooke Grove received significant interest from for-profit skilled nursing owners. The organization received multiple competitive offers that would allow Brooke Grove to repay a portion of its debt and boost liquidity. Brooke Grove selected a buyer who represented the best price at the lowest execution risk and began the process of documenting the sale.
Refinancing
During the summer of 2024, Sims prepared a bank solicitation package to secure a replacement lender. The package focused on the expected operating performance of Brooke Grove Retirement Village (BGRV), given the divestitures of Williamsport and Rest Assured. Due to the anticipated paydown of debt and improved liquidity, BGRV’s financial performance was expected to be strong. BGRV’s occupancy levels had improved following the pandemic, and agency staff usage had declined. Based on these factors, Brooke Grove received multiple term sheets following the solicitation.
After reviewing and negotiating the proposals, Brooke Grove ultimately selected Fulton Bank to provide the refinancing loan based on their competitive credit spread, loan term, and covenant structure. Further, Brooke Grove was in the initial planning stages of a repositioning project at its BGRV campus that would add independent living to right-size its unit mix. The organization wanted to ensure it could borrow additional debt for predevelopment expenses, which the Fulton terms allowed based on meeting certain metrics.
Executed Right®
Divestiture
After negotiations broke down with the initial buyer, Brooke Grove, with the assistance of HJ Sims, pivoted to an alternate buyer and began negotiating the APA. After some negotiation, Brooke Grove executed the APA over the summer and began moving towards closing, which was scheduled to occur in the fall. With the APA in hand for Williamsport, Brooke Grove reviewed divestiture opportunities for its Rest Assured campus. Due to the size and rural nature of the campus, Sims suggested partnering with a specialty senior living brokerage firm that offered alternative strategies to secure a buyer, including an auction process. However, in the weeks leading up to the auction process, Brooke Grove was able to secure a buyer outside of the auction process.
On October 1st, the sale of Williamsport closed which allowed Brooke Grove to repay its Series 2010 Bonds and add cash to its balance sheet. Two months later, the sale of Rest Assured closed.
Refinancing
With Fulton Bank selected, Sims pulled the working group together and began moving through the issuance process. Brooke Grove elected to work with its Series 2015 Bonds issuer, Montgomery County, Maryland. While the working group began documenting the loan in October 2024, the refinancing needed to occur prior to January 15th, the put date on the 2015 Bonds. The working group moved quickly through the holidays to ensure that the issuer approval process, bank due diligence, and legal documentation were all completed to ensure a successful closing before January 15th.
Further, to close the loan, Brooke Grove would be required to hedge at least 50% of the debt with a swap. Brooke Grove worked with Marathon Capital Strategies as its swap advisor to determine the preferred swap structure based on the current market and Brooke Grove’s potential repositioning plans. Brooke Grove decided to hedge 100% of the swap for four years, with the hedge declining to 50% of the loan thereafter. This structure would reduce potential swap termination expenses in the event Brooke Grove was ready to seek financing for the expansion project.
Financed Right®
On January 13, 2025, Brooke Grove and Fulton Bank successfully closed on the $26.4 million refinancing. The divestitures combined with the refinancing have set the organization up well to continue its planning efforts for the repositioning project, which will ensure the organization continues to serve seniors well into the future.
Aaron Rulnick
203.418.9008
David Saustad
214.909.8588
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Testimonials may not be representative of the experience of other clients. Past performance is no guarantee of future results
