Sims Assists Long-Term Client in Acquiring New Community
“For its first acquisition in many years, Lutheran Social Ministries of New Jersey naturally turned to its long-term strategic partner, HJ Sims, for assistance in structuring the financing. The Sims team was an important advisor throughout the acquisition process, from developing an initial proposal to the seller, through the date of closing, when two well-established New Jersey institutions joined together for a common mission of caring for those in need. With assistance from HJ Sims in finding a creative solution to financing the acquisition, The Villa at Florham Park will continue its longstanding service as the newest member of the LSMNJ senior living family.”
– Jennifer Cripps, Chief Financial Officer, Lutheran Social Ministries of New Jersey
Partnered Right®
Established in 1904, LSMNJ is a not-for-profit organization committed to “serve residents statewide who hurt, who are in need, or who have limited choices – regardless of religious background or affiliation.” LSMNJ addresses various human and social needs through senior living and healthcare, affordable housing, adoption, disaster recovery, and diverse other programs in 20 locations across New Jersey to more than 6,000 individuals.
HJ Sims has had the privilege of working with LSMNJ since 1989 by underwriting and advising on several tax exempt bond issues for the development and expansion of its existing senior living communities.
Structured Right®
The Sisters of Charity of Saint Elizabeth has operated a home for retired sisters in Florham Park, NJ since the 1930’s. Renovated and expanded over time, the community currently consists of 80 skilled nursing beds and 21 assisted living beds. Due to declining membership in recent years, the Sisters of Charity of Saint Elizabeth made the decision to transition their retirement facility to new ownership. They conducted a targeted search for a faith-based organization with a mission and expertise appropriate to operating the facility and continuing to provide care for their retired Sisters.
HJ Sims worked with LSMNJ management on establishing a valuation and structuring an acquisition offer for the property. Although the community would be open to the general public as well as the existing retired sisters under care, we encouraged LSMNJ to include a subordinate seller note as a portion of the purchase price to protect against issues that may arise during the transition.
After a period of inactivity, a definitive agreement with the Sisters of Charity of Saint Elizabeth was reached in August that required closing of the purchase by the end of September. The purchase price was $16 million, including a $3.5 million subordinated seller note with a 5-year final maturity.
Executed Right®
HJ Sims revived discussions with an interested bank and a working group of attorneys that had receded when negotiations stalled. The cash portion of the purchase price was structured as a direct placement of tax exempt bonds to the bank along with a taxable line of credit for future working capital needs. The credit facilities totaled $14.4 million. Over the course of 8 weeks, credit approval was obtained by the bank, approval was obtained by the Public Finance Authority to issue the bonds and the required documentation was negotiated to complete the purchase within the required timeframe. On September 30, 2016, LSMNJ acquired the community and renamed it The Villa at Florham Park.
Financed Right®
The interest rate on the tax exempt bonds was fixed at 2.40% for five years. Although longer term financing was available, the term coincides with the maturity of the underlying seller note and provides flexibility for potential future growth opportunities at the community.
For more information on how Lutheran Social Ministries of New Jersey was Financed Right® by HJ Sims, please contact:
Andrew Nesi
(203) 418-9057