From Seed Money to Investment Grade Rating, Sims Finances Cadbury at Lewes
“As has always been our experience with the firm, HJ Sims provided the most thorough, comprehensive guidance for refinancing our bonds. Achieving an investment grade rating within 10 years of opening our community enabled us to obtain maximum debt service savings at the most efficient cost and effective interest rates. We remain loyal clients!”
– Arnold Weiner, Chief Financial Officer, Cadbury Senior Services
Cadbury at Lewes, Inc. is a Life Plan Community consisting of 82 independent living apartments, 48 independent living cottages, 45 assisted living bed (including 15 memory care beds), 40 nursing beds, a community center and a wellness center, located in Lewes, Delaware, less than 2 miles from the Atlantic Ocean and Delaware Bay. The community opened in 2007, and the skilled nursing center enjoys a 5 star rating.
Cadbury at Lewes is a member of Cadbury Senior Lifestyles, a not-for-profit Quaker guided organization with 35 years of experience providing care and services to seniors both in communities and their homes.
HJ Sims has had the privilege of working with Cadbury since its inception by providing seed capital for its development and underwrote the initial bond issue in 2006.
Being a conservative organization, the board of directors did not want to extend the maturity of the existing bonds or increase the amount of debt. As such, any debt service savings would need to be accomplished by obtaining the lowest possible interest rates on the new bonds. HJ Sims worked with Cadbury management on effectively communicating the financial strengths of the organization in order to achieve a BBB rating with a Stable outlook from Fitch Ratings within 10 years of the community’s opening. This expanded the universe of potential investors significantly to position the new bond offering for optimal results.
After several years of historically low interest rates, market conditions began to change in October when the bond issue was brought to market. Despite the headwinds, HJ Sims sold $17.6 million in bonds to both institutional and individual investors at interest rates closely in line with management’s initial expectations. In addition, HJ Sims structured the bonds with a first call date of seven years as compared to the industry norm of 10 years.
The 2016 bonds generated annual debt service savings of approximately $200,000 for a net present value savings of $2.4 million, equal to over 12% of the refinanced bonds.
For more information on how Cadbury at Lewes was Financed Right® by HJ Sims, please contact: