Sims Provides Bridge Financing for Recently Stabilized Senior Housing Community
Partnered Right®
Based in the Southeast, the Borrower is a best-in-class senior living owner, operator and developer, with over 100 senior housing communities in six states with the capacity to serve over 10,000 residents. Sims previously partnered with the Borrower on multiple financings dating back to 2015.
Structured Right®
HJ Sims (“Sims”) was approached by the Borrower to refinance the existing debt on an assisted living and memory care Community (the “Community”) located in a coastal city in the southeast. The Community opened in 2021 and recently reached stabilization. However, the Community needed a longer track record of stabilized performance to maximize proceeds for a permanent financing and the existing debt at the Community was approaching maturity. Sims and its bank partner (the “Bank Partner”) proposed a high-leverage, uni-tranche first mortgage (the “A/B Loan”) to fund the refinancing.
The A/B Loan combined two tranches of debt into a single debt instrument (the “A/B Loan”) with the Bank Partner providing a portion of the A/B Loan (the “Tranche A”) on a priority basis and Sims providing a portion of the A/B Loan (the “Tranche B Funding”) on a subordinate basis. From the perspective of the borrower, the loan functions as a single debt obligation under a single loan agreement and security package.
Executed Right®
HJ Sims funded the subordinate Tranche B of the first mortgage loan, which in combination with the Tranche A proceeds provided by its Bank Partner, funded the refinancing.
Through an affiliate of Herbert J. Sims Investments, LLC (“HJSI”), Sims sold securities through its Private Client Group to fund the loan. The loan was structured with interest only payments over the 24-month term of the loan, limiting debt service expense over the near-term. The Borrower expects the A/B Loan to be refinanced with HUD-insured or other permanent financing proceeds during the initial term, but the loan also included extension options. Furthermore, the A/B Loan carries a floating interest rate tied to the 30-day SOFR rate and included an interest rate cap, limiting interest rate risk while opening the possibility of a lighter interest obligation if rates subside.
Financed Right®
The customized financing solution was structured to help the Borrower with both its short and long-term financing needs. As an equity neutral transaction, the Borrower was able to preserve capital for future growth and support of its communities.
HJ Sims excels in providing customized debt and equity capital for senior living providers utilizing a variety of direct financing solutions including equity, preferred equity, mezzanine debt, and high leverage first mortgage loans, tailored to meet the unique financing needs of valued partners.
The financing marks Sims’ eleventh successful closing with the Borrower.
For more information, please contact:
Curtis King
512.519.5003
Brett Edwards
512.519.5001