HJ Sims Closes Second Life Insurance Company Loan in Less than 30 days
HJ Sims recently closed its second life insurance company loan in a 30-day period for the refinance of an assisted living and memory care community located in the Rocky Mountains. Loan proceeds were used to pay off the full recourse construction loan of the recently completed 49-unit community.
The experienced Sponsor and real estate developer, along with a well-established regional, seniors housing operator, currently managing more than 25 communities across the Western U.S. partnered with HJ Sims to determine the best approach in obtaining long term financing in a volatile capital market.
HJ Sims was engaged to analyze all possible scenarios in considering the best next step in the capitalization process for the community.
In a rapidly changing interest rate environment, HJ Sims thoughtfully managed the risk of total requested loan proceeds being significantly reduced. Successfully avoiding the need for bridge financing, an extra step in the process, HJ Sims presented the borrower with permanent financing terms from a life insurance company that was ultimately selected as the capital provider.
The $9.0MM in loan proceeds, were not only used to pay off the construction loan in full but also freed up total bank exposure allowing the client to recycle capital to begin another strategic construction project.
The non-recourse loan was structured with a fixed interest rate, ten-year term, 18 months of interest only payments, followed by a 30-year amortization.
After considering multiple scenarios, HJ Sims established a competitive bidding process among capital providers and successfully provided the borrower with negotiation leverage in obtaining optimal loan-to-value leverage and the most cost-effective terms available.
While adapting to a rapidly increasing interest rate environment, the fixed interest rate was locked at the time of initial deposit, at the beginning of the underwriting process and not at the end, eliminating the uncertainty of rising interest rates and distinguishing the gap of comparison even more between the competing lenders.
With the risk of decreased occupancy and other fluctuating market conditions during underwriting, HJ Sims was also successful in navigating areas of support with its lending partner to maintain the loan proceed amount and terms with no changes or surprises.
HJ Sims acted as strategic advisor and placement agent, managing the process from start to finish while providing complete transparency to the borrower in analyzing multiple financing options to consider.
This was the first engagement for HJ Sims with the Sponsor, fourth engagement with the operator and the second loan closing with a life insurance company for HJ Sims in less than 30 days.
HJ Sims has been providing creative capital solutions in the seniors housing and healthcare space for more than 85 years as a specialized investment bank. Products include; proprietary bridge financing under an A/B uni-tranche structure, in-house mezzanine debt, HUD financing and permanent financing, advisory services and equity investments. HJ Sims excels in providing creative, timely solutions to allow our clients to focus on what they do best, provide high quality senior living and care at their communities and healthcare facilities.
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