HJ Sims Provides High-leverage Acquisition Financing for a Utah Senior Living Community

FOR IMMEDIATE RELEASE  

CONTACT: Tara Perkins, AVP | 203-418-9049 | tperkins@hjsims.com

HJ Sims Provides High-leverage Acquisition Financing for a Utah Senior Living Community

FAIRFIELD, CT– HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce that it recently provided a high leverage bridge loan for the successful acquisition of a Utah senior living community.

The community has been the most recognized option for seniors housing in its local market and will continue to care for long-time residents that in some cases, come from miles away. Featuring 55 units of assisted living and memory care, the community features mountain views from its hilltop location in a thriving and growing local market.

A regional owner, operator and developer of seniors housing communities, with 15+ years of experience, partnered with Sims to close on the acquisition. The well-established group specializes in assisted living and currently manages over 1,600 units in more than 25 communities across five states in the Mountain West region. The sponsor has deep local knowledge and is well experienced in bringing that local touch to their communities, making it truly feel like home for all of their residents. With a strong understanding, and insight into the major primary markets and growing secondary markets in the region, the group’s local knowledge and operational expertise provides a clear strategy in expanding their geographical reach. This addition to their growing portfolio is an ideal fit.

Seeking a high-leverage acquisition loan and the ability to close under tight timing constraints, the owner/operator approached Sims for the solution. Partnering with Live Oak Bank, Sims provided a high-leverage bridge loan to fund the acquisition, and arranged funds for capital improvements at the property. The first mortgage was structured as an A/B uni-tranche loan, acting as a single debt obligation with one set of loan documents and one monthly mortgage payment.

The high-leverage A/B structure proved to be different from a conventional bank loan, allowing the operator to increase their ownership and avoid involving additional equity partners. The loan was structured with an interest-only period, allowing the group to limit debt service expense over the near term. The loan included an upfront debt service reserve, which allowed the first payment to be pushed out enabling the borrower to focus immediate, out-of-pocket expenses on capital improvements at the property, prioritizing the upgrade of the community.

The “outside-of-the-box” customized financing structure helps the long-time operator preserve strategic

capital for additional growth opportunities and for the support of other communities in their portfolio. A principal and co-founder of the group commented, “Sims not only provided a unique solution that helped us reduce the need for outside investors that would dilute our ownership, but met the timing constraints that were so important to everyone involved.”

Sims excels in providing customized, timely financing solutions for communities across the country, allowing owners and operators to focus on providing quality senior living at their communities.

Financed Right® Solutions—Jeff Sands: jsands@hjsims.com or 203.418.9002 | Brady Johnson: bjohnson@hjsims.com or  949.558.8297 | Curtis King: cking@hjsims.com or 512.519.5003 | Brett Edwards: bedwards@hjsims.com or 512.519.5001

 ABOUT HJ SIMS: Founded in 1935, HJ Sims is a privately held investment bank and wealth management firm. Headquartered in Fairfield, CT, Sims has nationwide investment banking, private wealth management and trading locations. Member FINRA, SIPC. Testimonials may not be representative of another client’s experience. Past performance is no guarantee of future results.  Facebook, LinkedIn, TwitterInstagram.

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HJ Sims Partners with Westminster Village as Investment Bank and Swap Advisor Helps Community Accomplish a Refinancing

FOR IMMEDIATE RELEASE  

CONTACT: Tara Perkins, AVP | 203-418-9049 | tperkins@hjsims.com

HJ Sims Partners with Westminster Village as Investment Bank and Swap Advisor Helps Community Accomplish a Refinancing

FAIRFIELD, CT– HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the successful June 2021 Direct Bond Placement in the amount of $60,515,000 for Westminster Village (WVWL) in West Lafayette, IN.

WVWL was established in 1976 and subsequently formed into a not-for-profit Life Plan Community (LPC) in 1981. Located off of Cumberland Park in West Lafayette, IN, WVWL held a long-standing reputation for producing quality services to middle-class retirees. Historically a partner with Purdue University, WVWL’s reputation and mission grew into today’s 346-bed LPC.

Given WVWL’s financial strength, the community sought to take advantage of the low interest rate environment in 2020 to refinance its outstanding Series 2014 tax-exempt and taxable Direct-placement Bonds (Series 2014 Bonds). The incumbent bank proposed a refinancing opportunity that struck WVWL’s management team as an above-market proposal. WVWL engaged Sims to analyze the proposal. Sims was chosen based on experience, market-depth and culture. Sims solicited banking partners based on engagement and initial analysis.

WVWL went into the market seeking to refinance the Series 2014 Bonds. Tied to the Series 2014 Bonds were two swaps that were largely out-of-the-money; WVWL also had a legacy forward-starting swap that was originated in 2010 and became effective in 2020 during COVID-19.

Sims constructed a plan of finance to generate adequate debt service savings despite the expenses associated with refunding the Series 2014 Bonds and terminating all of WVWL’s Swaps. The plan of finance conformed to the terms provided by any potential banking partners via the bank solicitation.

Sims found a banking partner with terms that would offer flexibility and savings for WVWL. The partner offered a proposal that provided material savings. The plan of finance Sims tailored for WVWL generated enough savings to for the community to reconsider a new-money. The $15 million project repurposed some of WVWL’s existing independent living units into assisted living and memory care units that were in high demand on campus.

Sims, in conjunction with the new banking partner, crafted the $60,515,000 plan of finance (Series 2021 Bonds). The financing included the refinancing escrow for the Series 2014 Bonds, the termination of all existing swaps (including the forward-starting swap), and a draw-down facility for the new-money project. The terms provided by the banking partner and the structure formulated by Sims allowed for WVWL to comfortably execute the Series 2021 Bonds without increasing residents’ monthly service fees. This was accomplished via aggressive pricing, a 12-year term, and a 30-year amortization provided by the new banking partner.

Sims closed the Series 2021 Bonds for WVWL via Direct Placement Bonds for the tax-exempt refinancing, a Term Loan for the taxable refinancing, and a draw-down facility for the new project money. After pricing the new swaps for the refinancing debt, Sims captured a taxable interest rate of 3.19% and a tax-exempt interest rate of 2.54% for WVWL. The credit spread for the refinancing portion was 100 bps lower than the incumbent bank’s original refinancing proposal. The new-money project funds were kept variable and will utilize a draw-down feature that allows WVWL to materialize capitalized interest savings. Sims generated a plan of finance that accomplished all of WVWL’s objectives, including $15 million in new-money, without increasing maximum annual debt service against the refunded Series 2014 Bonds, resulting in an efficient capital structure for the community that generated savings and a new product offering for campus residents to enjoy.

“As I was relatively new to my position, the thought of handling a refinancing seemed like a daunting task. Thankfully, after careful consideration our Board of Directors chose to partner with Sims. Sims understands the complex procedures involved with refinancing and made sure to provide extensive education during the entire process. Lynn and Brady took great care in ensuring each step was broken down into understandable components. I truly enjoyed working with Sims and look forward to continuing our partnership for years to come,” said Jessica Argerbright, Director of Accounting and Finance, WVWL.

Financed Right® Solutions—Lynn Daly: ldaly@hjsims.com or 312.505.5688 | Brady Richardson: brichardson@hjsims.com or 240.207.1362.

 ABOUT HJ SIMS: Founded in 1935, HJ Sims is a privately held investment bank and wealth management firm. Headquartered in Fairfield, CT, Sims has nationwide investment banking, private wealth management and trading locations. Member FINRA, SIPC. Testimonials may not be representative of another client’s experience. Past performance is no guarantee of future results.  Facebook, LinkedIn, TwitterInstagram.

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Sims Mortgage Funding Completes Metairie Manor Refinancing in Louisiana

by Anthony Luzzi

From the Jersey Meadowlands to the Bayou – Sims Mortgage Funding Has It Covered!

Although it is headquartered in New Jersey, Sims Mortgage Funding seems to have a second home in Louisiana – we have closed close to $530 million in HUD-insured loans in the Pelican State. We returned there last month to complete a $10,814,900 refinancing for Metairie Manor, a 287-unit, Section 8 funded, affordable senior housing community owned and managed by affiliates of the Archdiocese of New Orleans.

The backstory? We originally refinanced Metairie Manor in 2012 when it paid off its HUD Section 202 Direct Loan; that refinancing produced about $250,000 in annual debt service savings that have been used to fund wellness and affordable nutrition programs, resident units deep-cleaning services, and enhanced transportation options. Interest rates for HUD-insured loans have dropped since the 2012 refinancing, so the Archdiocese brought us back to evaluate options to generate more debt service savings.

Our solution? We originated a new HUD-insured loan under the Section 222(a)7 program, an expedited review option that does not require an appraisal and has a pared-down application and underwriting format. This minimized the time it took us to develop the application and loan underwriting, and the time it took for HUD to review and approve the deal.

The result? The 223(a)(7) loan reduced the project’s interest rate by 33% and produced debt service savings of $118,000 annually. Moreover, in order to maximize annual debt service savings, we negotiated an extension of the loan term of almost 10 years. The additional savings from the new 223(a)(7) loan materially expands Metairie Manor’s capacity to provide services and programs to its residents, enhancing it already-solid reputation in the community. We also built approximately $700,000 into the new loan to supplement the existing Reserve for Replacements fund, so there is a stable platform to provide for Metairie’s physical needs in the future.

The takeaway? The new 223(a)(7) loan will enable Metairie Manor to expand its programs and services and increase its capital reserves – all to be accomplished without an increase in the existing Section 8 funding.

An encore? The Metairie Manor refinancing is the eleventh HUD-insured loan we have closed for the Archdiocese and its management affiliate, Christopher Homes, Inc.

For more information, please contact Andrew Patykula at apatykula@simsmortgage.com.

Sims Mortgage Funding, Inc. originates, underwrites, and funds loans for Healthcare, Multifamily and Hospital projects. We have completed over $2 billion in HUD-insured transactions and are an approved LEAN (healthcare) and MAP (multifamily) lender.

Sims Mortgage Funding, Inc. is a wholly owned subsidiary of HJ Sims.

HJ Sims Secures $41.9M of Bank Financing for Expansion Project and Refinancing

FOR IMMEDIATE RELEASE

CONTACT: Tara Perkins, AVP | 203-418-9049 | tperkins@hjsims.com

HJ Sims Secures $41.9M of Bank Financing for Expansion Project and Refinancing

FAIRFIELD, CT– HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the successful closing of a May 2021 financing in the amount of $41.89MM for Sunset Retirement Communities (Sunset), a multi-campus not-for-profit senior living provider located in Michigan.

In 2009, Sunset embarked on development of Waterford Place, completing the campus in 2015. In 2020, Sunset pursued phase three, including the addition of 62 independent living apartments, 20 villas and amenity spaces. Sims was engaged to identify the optimal capital structure for Sunset’s project financing, while reviewing existing bank debt.

The market study for phase three (completed in March 2020) supported the need for the expansion. COVID-19 slowed down pre-sales and created a need for management to focus on existing operations. After approaching potential lenders in May 2020, Sunset’s management team delayed the financing. However, Sims continued to work with Sunset, exploring capital structures. With its strong balance sheet and foundation support, Sunset moved forward with development of the 20 villas and self-funded construction costs.

During Autumn 2020, Sims re-analyzed financing options for Sunset’s apartment expansion and existing debt. Hefty termination costs associated with an existing long-term swap limited the number of viable refinancing options. Sims identified a new commercial banking partner that would finance the apartment project and replace one of the lenders.

In order to minimize Sunset’s long-term cost of capital and avoid large forward starting swap premiums, Sims worked with the lending partner to allow for the new money long-term bond proceeds to be drawn first such that the forward swap could take effect in just five months. By drawing the long-term proceeds first, Sunset has time to secure proceeds from strategic initiatives, which will be applied to project costs before any draws on the short-term bond proceeds. This allows Sunset to further minimize its funded interest costs during construction. 

On May 12, 2021, Sims closed the Series 2021 financing for Sunset, which included three unique tranches of debt:

  • $13.40M of Series 2021A Bonds, partially refunding Series 2014 debt and enabling Sunset to avoid any disruption or incurring a greater cost of capital.
  • Up to $9.90M of Series 2021B Bonds, funding construction costs associated with the project and minimizing annual debt service burden.
  • Up to $18.59M of Series 2021C Bonds, funding construction costs associated with the project and enabling Sunset to deliver and minimize the overall debt service.

The Series 2021 financing, coupled with management’s prudent strategic decisions, positions Sunset for operational success and growth.

“Pursuing debt financing for an expansion and bank replacement during COVID-19 was challenging, but Sims made it happen. With Lynn Daly and Kerry Moynihan on point, Sims relentlessly pursued every avenue to ensure Sunset was Financed Right®. Sunset is very grateful for the Sims team’s expertise, industry connections and ability to close a deal with the right terms on an aggressive schedule. Sunset could not have picked a better partner. There is no question who our partner will be on future financings,” said Steven Bossenbroek, CFO, Sunset Retirement Communities.

Financed Right® Solutions—Lynn Daly: ldaly@hjsims.com or Kerry Moynihan: kmoynihan@hjsims.com 

ABOUT HJ SIMS: Founded in 1935, HJ Sims is a privately held investment bank and wealth management firm. Headquartered in Fairfield, CT, Sims has nationwide investment banking, private wealth management and trading locations. Member FINRA, SIPC. Testimonials may not be representative of another client’s experience. Past performance is no guarantee of future results.  Facebook, LinkedIn, TwitterInstagram.

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Pending LIBOR Replacement

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LIBOR, which has been the primary index upon which Senior Living Bank Loans and Swaps have been denominated in new and existing financings, is to be discontinued and as such a replacement index is needed. Borrowers should consider the use of an alternate index, and this piece provides expertise on the pending LIBOR replacement as a consideration for senior living organizations.

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HUD’s Three-Year Waiver – One Year Later

by Anthony Luzzi

It has been slightly over one year since HUD waived its “three-year requirement” for multifamily projects to be eligible for mortgage insurance under the Section 223(f) refinancing and acquisition program.  Prior to that, a multifamily property could not benefit from obtaining a 223(f) loan until it was in service for three years, an eternity, especially when current rates for HUD-insured loans have been at historically low levels.  Developers unwilling to wait three years have typically used HUD’s Section 221(d)(4) program to finance new projects. 

However, the three-year waiver has given multifamily developers an opportunity to finance new projects with the best of both worlds – short-term bank financing for construction followed by a HUD take-out once the project has reached a modest level of stabilization.  How modest?  HUD will accept an application for 223(f) mortgage insurance after the property has reached one month of 1.176 debt service coverage and will close on the loan after three consecutive months at that same coverage has been achieved.  

However, developers considering bank financing for multifamily construction instead of a 221(d)(4) loan, then using a 223(f) loan to take out the bank debt should consider the advantages and disadvantages of that approach.

The Advantages:

  • The time to complete the bank financing will be shorter, enabling construction to start sooner.
  • Davis-Bacon “prevailing” wages for construction will not be required with a bank loan.
  • The construction contract and architect agreement can be structured with more flexibility.
  • The bank’s application will be less complicated and esoteric.

The Disadvantages:

  • Bank loan-to-cost ratios are lower, which means more equity will be needed to complete a bank deal. Some of this additional equity can be recovered with the 223(f) loan, as cash-outs at 80% loan-to-value underwriting are permitted.
  • Banks require recourse and personal guarantees.
  • There is interest rate risk on the 223(f) loan since it will not close until after construction is completed and there has been at least three months of stabilized debt service coverage.
  • Construction lending by banks has been somewhat curtailed during the COVID-19 pandemic.

We recently assisted a prospective client evaluate these options for a market-rate multifamily development in Florida and would be pleased to do the same for you.  What was his decision? For more information, please contact Anthony Luzzi at aluzzi@simsmortgage.com.

Sims Mortgage Funding, Inc., a wholly owned subsidiary of HJ Sims, originates, underwrites, and funds loans for Healthcare, Multifamily and Hospital projects. We have completed over $2 billion in HUD-insured transactions and are an approved LEAN (healthcare) and MAP (multifamily) lender.

HJ Sims arranges $4M PACE financing for StoneCreek

HJ Sims completed a $3.8 million retroactive Property Assessed Clean Energy (PACE) financing package on behalf of StoneCreek Real Estate Partners and Civitas Senior Living, for StoneCreek Littleton, a 92-unit assisted living and memory care facility in Littleton, Colorado that opened in January 2020. Please read more in Senior Housing News.

HJ Sims Partners with StoneCreek Real Estate Partners to Facilitate $3.8 million in Retroactive PACE Financing

FOR IMMEDIATE RELEASE

CONTACT: Tara Perkins, AVP | 203-418-9049 | tperkins@hjsims.com

HJ Sims Partners with StoneCreek Real Estate Partners to Facilitate $3.8 million in Retroactive PACE Financing

FAIRFIELD, CT– HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce a successful April 2021 Retroactive Property Assessed Clean Energy (PACE) financing in the amount of $3.8 million for StoneCreek Real Estate Partners (StoneCreek).

StoneCreek, a Dallas based developer, is a collaboration of professionals with 50+ years of combined experience in the operations, development and ownership of successful senior living communities in TX, CO and AZ. The operator, Civitas Senior Living (Civitas), is a Fort Worth, TX based for-profit owner/operator of senior living communities in TX, FL, OK, NM, KY and AZ. Founded in 2012, Civitas has 100+ corporate employees and manages 45+ senior living communities.

The StoneCreek Littleton development is new construction of a 92-unit senior housing community with 70 assisted living units and 22 memory care units. The community opened in January of 2020 and provides local access to quality senior housing and care in the Littleton area of Denver. With occupancy and operational challenges related to the COVID-19 pandemic, StoneCreek was exploring alternative capital sources to provide additional operational leverage when Sims proposed exploring retroactive PACE financing.

PACE is a Public/Private partnership that allows property owners to finance projects through voluntary assessments placed on the property by a state economic development agency. The program finances 100% of the energy efficiency, renewable energy, water conservation, resilience improvements and the related costs for construction and renovations/retrofits up to about 20% of the property’s appraised value. The financing is collected with regular local real estate taxes and assessment payments are amortized at a fixed-rate over the useful life of the project (15-25 years). The PACE program is typically considered an alternative source of financing to mezzanine debt where interest rates average between 12%-15%. In many states, PACE is allowed to be applied retroactively post-certificate of occupancy for qualified costs for a determinate amount of time.

Sims coordinated with StoneCreek, Civitas, the PACE loan provider and the Colorado PACE Authority for approval for PACE financing from the senior construction lender. Despite the atypical nature of the program, the financing team satisfied the concerns of the senior construction lender while also navigating the various regulatory challenges associated with multi-party financings.

StoneCreek, with the guidance of Sims, was able to borrow $3.8 million in PACE financing at 5.85% to finance necessary operating expenses related to an early 2020 opening and the ensuing impact of the Pandemic.

Financed Right® Solutions— James Rester: 901.652.7378 | jrester@hjsims.com, Curtis King: 603.219.3158 | cking@hjsims.com or Ryan Snow: 843.870.4081 | rsnow@hjsims.com.

ABOUT HJ SIMS: Founded in 1935, HJ Sims is a privately held investment bank and wealth management firm. Headquartered in Fairfield, CT, Sims has nationwide investment banking, private wealth management and trading locations. Member FINRA, SIPC. Testimonials may not be representative of another client’s experience. Past performance is no guarantee of future results.  Facebook, LinkedIn, TwitterInstagram.

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