Sims Finances Campus Relocation for Disabled Residents
Partnered Right®
Bancroft is a leading not-for-profit provider of specialized services and support to individuals with intellectual or developmental disabilities, autism and acquired brain injuries. Through its innovative continuum of care, Bancroft provides a range of services including education, vocational training/supported employment and behavioral stabilization in campus- and community-based settings. Founded in 1883, Bancroft serves more than 1,500 individuals annually with 1,930 full-time equivalent employees through more than 30 programs in New Jersey, Pennsylvania and Delaware.
HJ Sims was engaged by Bancroft to structure and implement financing for the relocation of its main campus (and three major programs) from Haddonfield, NJ to a new 80-acre campus in nearby Mt. Laurel, NJ.
Structured Right®
Multiple issues were successfully addressed in the financing preparation process, including: 1) Bancroft’s varied and specialized range of services with many sources of revenue, primarily from governmental payors, under 30+ programs (Financial Feasibility, Due Diligence, Extended Bond Marketing Process with multiple components); 2) substantial financing need for new capital and refinancing; and 3) splitting bond issuance between two authorities (in-state NJEDA and out-of-state PFA) to realize interest rate savings and construction cost savings.
Executed Right®
HJ Sims effectively positioned Bancroft through a detailed financial forecasting process, extensive due diligence and comprehensive information disclosure in bond marketing documentation and an effective bond marketing process with multiple components. Beyond bond financing proceeds, additional sources of funding included proceeds from the sale of Bancroft’s main campus in Haddonfield (with a leaseback arrangement enabling Bancroft to continue its operations during construction of the new campus) combined with equity from Bancroft that had been allocated specifically for the project. This funding was further supplemented by a multi-million dollar capital campaign conducted in support of the campus relocation project. Additionally, HJ Sims and Bancroft modified Bancrocft’s commercial banking relationship to expand its line of credit to provide contingent financing capacity and future capital expenditures.
Furthering the efforts to manage project cost and overall cost of financing, HJ Sims played an instrumental role, working with Bancroft Management and the project development consultant, in evaluating conduit issuer options for the financing. This ultimately resulted in the issuance of Bancroft’s bonds through two issuing authorities, combining the new project financing and refinancing of existing debt. The majority of the financing was structured on a tax-exempt basis with the remainder, relating to a portion of the refinancing, issued on a taxable basis to comply with federal tax law provisions.
The financing process was complex, involving interplay with various project development activities along with the sale-leaseback of the existing campus. This ultimately required completion of all conditions precedent to financing in the midst of conducting project site work before formal construction began. The importance of these coordinated steps and timely completion was heightened by an impending deadline to start construction in order to comply with local approval requirements and timing and budgetary constraints.
Financed Right®
HJ Sims successfully priced the bonds, totaling $104 million, with sale to a combination of institutional and retail investors, and completed the financing in August, 2016. The financing enabled Bancroft to maintain its desired schedule, tracking key project construction milestone dates. Investor demand was strong, facilitated by the extended bond pre-marketing period and extensive investor interaction in various forms. While the majority of the financing was for project costs, the refinancing enabled Bancroft to replace its outstanding direct bank financing with an attractive fixed rate, combining tax-exempt and taxable rates and extended maturity/amortization.
For more information, please contact:
Jim Bodine
(215) 854-6428