Aldersgate United Methodist Retirement Community (July 2021)

HJ Sims Partners with Aldersgate United Methodist Retirement Community as Investment Bank to Accomplish a Multi-faceted Refinancing

“It was a pleasure and gift having the Team at HJ Sims lead our organization through a successful refinancing. The folks on the Sims team have exceptional technical skills to offer, and provided our various stakeholders clear guidance and wise counsel every step of the way. Their processes and their people truly create an experience of allowing for alignment of the end goal being accomplished, with honoring our mission and the strategic vision to which Aldersgate is committed. We are grateful for our partnership with the HJ Sims team and look forward to future opportunities to work side-by-side toward exciting outcomes for the future of Aldersgate Life Plan Services.

– Suzanne Pugh, President and CEO

Aldersgate Logo

Partnered Right®

Aldersgate United Methodist Retirement Community (“Aldersgate”) was founded in the 1940s as an organization committed to providing housing and services to elders in the community. Since then, the organization has grown to be one of Charlotte’s most respected aging services providers. Aldersgate now provides innovative continuing care retirement community services, which includes 302 independent living homes, 44 assisted living units, 61 memory care units, and 125 private, licensed and certified (Medicare and Medicaid) skilled nursing units.

HJ Sims has been a partner with Aldersgate since assisting the organization in financing pre-development costs for a start-up community (Generations at Shalom Park) in 2019. In 2020, HJ Sims identified a refunding opportunity for the community’s outstanding Series 2013 Bonds using a Cinderella structure. This structure would allow Aldersgate to refund the community’s outstanding Series 2013 Bonds prior to the optional redemption date (July 1, 2023), permitting the community to access historically low interest rates.

Structured Right®

In 2017, the Tax Cuts and Jobs Act (TCJA) eliminated advance refundings using tax-exempt municipal bonds. HJ Sims proposed a plan of finance that would utilize Cinderella Bonds, which would be taxable until the optional redemption date. Thereafter, the bonds would convert to tax-exempt, ensuring that the refunding bonds would comply with the 2017 TCJA.

Utilizing Cinderella Bonds typically requires a private placement due to the need to convert the bonds from taxable to tax-exempt. Therefore, Sims proposed that the Cinderella Bonds be purchased by a commercial bank. This structure would also allow Aldersgate to eliminate the debt service reserve fund requirement for the Series 2013 Bonds and utilize a portion of the reserve fund as part of the refinancing.

Further, HJ Sims customized the amortization schedule to optimize the Community’s aggregate Maximum Annual Debt Service (“MADS”) creating an additional $185,000 in reduced MADS.

Executed Right®

In early 2021, Aldersgate and its board chose to pursue the Cinderella financing with HJ Sims serving as Placement Agent. HJ Sims and Aldersgate’s financial advisor, Pearl Creek Advisors, conducted a large bank solicitation and held a virtual site visit. In addition to requesting proposals for the Cinderella financing, Sims and Pearl Creek Advisors also asked for proposals for refinancing Aldersgate’s outstanding Series 2017B Bank Debt, which was privately held by Truist Bank. The Series 2017B Bank Debt had a commitment through 2027 and a portion of the debt (roughly half) was synthetically fixed with a swap at an all-in rate of 3.9215%. The goals of this refinancing included extending the put date, lowering the credit spread by 80 bps, and eliminating variable interest rate risk.  

Seven banks would attend the virtual site visit. Thereafter, HJ Sims and Pearl Creek Advisors negotiated with multiple banks on behalf of Aldersgate to receive the most competitive terms. Ultimately the incumbent, Truist Bank, provided the most competitive term sheet for the Cinderella refinancing and the refinancing of the Series 2017B Bank Debt. The commitment contained attractive interest rates, a 12-year commitment period, covenants that largely conformed to Aldersgate’s master trust indenture, and a SOFR based loan. Using a SOFR based loan (rather than LIBOR) eliminated the need to transition the loan once LIBOR is phased out. Further, the 12-year commitment period nearly eliminated commitment risk for the Cinderella refinancing, which was structured to mature in 2035.

HJ Sims would also coordinate with Aldersgate’s swap advisor, KPM Financial, to structure three SOFR based swaps and to terminate the existing Series 2017B swap. The Cinderella refinancing of the Series 2013 Bonds included a taxable swap through April 2023 (90-days before the optional redemption date) and a forward, tax-exempt swap that would become effective from April 2023 through July 2033 (the put date). The refinancing of the Series 2017B Bank Debt included a tax-exempt swap that would be effective from closing of the loan through July 2033.

Financed Right®

On July 28, 2021, Aldersgate and Truist closed on the $28,685,000 Series 2021A Bonds to defease the Series 2013 Bonds and the $15,340,000 Series 2021B Bonds to refinance the Series 2017B Bank Debt. The taxable swap rate for the Series 2021A Bonds through April 2023 was 2.151% and the tax-exempt forward rate in effect from 2023 through 2033 will be 2.659%. The tax-exempt swap rate for the Series 2021B Bonds through 2033 was 2.587%.

The Cinderella Bonds are expected to produce average annual savings of $250,000 or $3,889,019 in total savings through the 12-year bank commitment period. The refinancing of the Series 2017B Bank Debt extended the put date by six years, eliminated interest rate risk through the commitment period, and lowered the all-in swap rate from 3.9215% to 2.587%. Overall, Aldersgate was able to increase its debt service coverage ratio by 0.14 bps, better positioning the community in the ever-changing senior living landscape.

For more information, please contact:

Tom Bowden


David Saustad


Testimonials may not be representative of the experience of other clients. Past performance is no guarantee of future results