Sims Completes Financing for Diversified Portfolio
Sims was approached by affiliates of Birchwood Health Care Properties (“Birchwood”) to provide subordinate loan financing in connection with the acquisition of a Portfolio in Oklahoma comprised of 4 skilled nursing facilities, a hospice business and a home health business. Transition Health Services, an experienced operator, is managing the Portfolio. Sims successfully financed a subordinate loan for $5.25 million to fund a portion of the acquisition.
There were a number of challenges associated with this financing:
- Assessing and determining the valuations separately to accommodate the mix of real estate and service driven assets within the Portfolio.
- Underwriting mezzanine deal terms that accommodated certain regulatory constraints while at the same time meeting the requirements of both the Senior Lender and an AR Lender.
- Utilizing the Sims HUD Plus program, Sims structured the debt in a way that was flexible enough to allow Birchwood to meet its goal of maximizing a subsequent HUD financing on the real estate assets.
A new entity, BHCP Acquisition, LLC (the “Sims Issuer”), was formed to issue a series of bonds. The bonds were successfully sold to Sims’ high-net-worth, accredited investors. Proceeds from the bonds were used by the Sims Issuer to fund the subordinate loan to Birchwood.
Sims was able to underwrite and then implement a subordinate debt structure that met the needs of Birchwood, the Senior Lender, the AR Lender as well as HUD. Sims’ expertise and ability to be flexible allowed Birchwood to acquire a unique Portfolio and conserve its capital for future enhancements.
Successfully tackling complicated transactions is an example of Sims using its extensive investor base to help senior housing providers achieve their objectives. Sims excels in filling the niches that allow an owner or operator to complete a transaction by providing custom financing such as mezzanine debt or preferred equity.