HJ Sims Provides High Leverage Acquisition Financing for Senior Living Community in Utah
A regional, owner, operator and developer of seniors housing communities, with over 15 years of experience, recently partnered with Sims to close on the acquisition of a senior living community in Utah. The well-established group, currently manages over 1,600 units in more than 25 communities across five states in the Mountain West region. With a strong understanding and insight into the major primary markets and growing secondary markets in the region, the group’s local knowledge and operational expertise provides a clear strategy in expanding their geographical reach.
Seeking a high leverage acquisition loan and the ability to close under tight timing constraints, the owner/operator approached Sims to provide the solution. Partnering with a national bank, Sims provided a high leverage bridge loan to fund the acquisition and went even further to include an amount for capital improvements at the property. The first mortgage was structured as an A/B uni-tranche loan, acting as a single debt obligation with one set of loan documents and one monthly mortgage payment.
The high leverage, A/B structure proved to be different from any other conventional bank loan, allowing the operator to increase their ownership and avoid bringing on additional equity partners. In addition, the loan was structured with an interest only period, allowing the group to limit debt service expense over the near term. The loan also includes an upfront debt service reserve which allowed the first payment to be pushed out in order for the borrower to focus immediate, out-of-pocket expenses on capital improvements at the property, prioritizing the upgrade of the community.
The outside of the box, customized financing structure helps the long-time operator preserve strategic capital for additional growth opportunities and for the support of other communities in their portfolio. A principal and co-founder of the group commented; “Sims not only provided a unique solution that helped us reduce the need for outside investors, that would dilute our ownership but was also able to meet the timing constraints that were so important to everyone involved”. Sims excels in providing customized, timely financing solutions allowing owners and operators to focus on what they do best, provide quality senior living at their communities.
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