HJ Sims Closes Financings for Lenbrook, MRC Manalapan; Partners with Voralto for Acquisition

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 three transactions.

Lenbrook, a life plan community in Atlanta, GA, pursued financing for its recent Kingsboro at Lenbrook expansion. After a successful 2016 refinancing and a 2018 pre-development financing, Lenbrook again retained Sims to manage the financing process for the $107 million project. A priority  of Lenbrook’s was to maximize the ability to deleverage the debt of the financing without penalty. The entrance fee debt was maximized and the long-term debt amortized while permitting early repayment from turnover entrance fees.

Sims coordinated a request for proposals to gauge interest in both the entrance fee and long-term debt. Due to the COVID-19 impact on bond markets and conduit bond issuers, Sims coordinated with the board and management of Lenbrook to pivot the transaction from tax-exempt financing consisting of bank short-term debt and long-term fixed rate bonds to taxable all-bank financing while closing early and achieving Lenbrook’s goal of maximizing deleveraging while maintaining flexibility. Fitch assigned a BBB- rating with stable outlook.

In Monmouth County, New Jersey, MRC Manalapan (MRC) is developing an assisted living and memory care community. MRC principals (and LV Development) collaborated with Springpoint Senior Living (Springpoint) to arrange the project and contracted with Springpoint to operate the community (Springpoint at Manalapan) under a long-term lease. Sims was engaged to implement debt financing supplemented by equity provided by the MRC principals.

Following a Sims-led solicitation, Peoples United Bank was selected to provide $14.3 million of taxable senior debt financing, incorporating a construction/mini-perm structure with a five-year balloon maturity. The loan includes tiered-interest rate pricing with reductions in loan credit spread following progression from construction, opening and stabilization. Primary security includes a revenue pledge and property mortgage. Supplemental security includes dual guarantees provided by the MRC principals and succeeded at completion by a limited tenant guaranty. Sims, Peoples and the financing team worked diligently with the MRC principals to secure final approvals, successfully closing in mid-May 2020.   

Established in 1977 and headquartered in Houston and Dallas, TX, Voralto is a 42-year-old senior housing owner/operator with a combined 120+ years of experience in the senior housing industry. Committed to growing the company through strategic acquisitions and new developments, Voralto currently owns/operates 8 assets totaling 590 beds in TX and GA. Sims was approached by Voralto to provide equity for the acquisition of an assisted living and memory care community in northern TX. Voralto’s business plan included the implementation of operational changes.

Sims formed a joint venture with Voralto to acquire the community. Sims’ equity provided liquidity to overcome any short-term performance issues resulting from COVID-19 and time to implement the business plan.

Scheduled to close in March, Sims and Voralto overcame challenges from COVID-19. Drawing from expertise of its bankers and investors, Sims underwrote Voralto’s business plan and provided a customized solution.

Financed Right®:

Non-profit: Aaron Rulnick: arulnick@hjsims.com | For-profit: Jeff Sands: jsands@hjsims.com

Track Record 2019

At HJ Sims, we live and breathe the bond market. And we have the track record to prove it. Through bull markets and bear; through booms, bubbles and busts, we’ve demonstrated our exceptional expertise. For our clients, that means the ability to build wealth without riding the Wall Street roller coaster.

Through the years, we’ve compiled an impressive track record:

COVID-19 Response

March 18, 2020:

Dear Valued Client,

As you are likely closely monitoring the developments and impact of COVID-19, we are doing the same at HJ Sims. Our primary focus is the safety and well-being of our employees, our clients and their families.

We would like to update you on important preparations currently in place, and our ability to respond to your needs during this unprecedented time.

  • We have enacted a comprehensive COVID-19 business response plan and remain confident that as a nimble and resilient organization, we will maintain business continuity. We are prepared in the event the situation continues to escalate.
  • During this extraordinary time, we recognize that you rely on access to our financial professionals and representatives. As such, we have prepared plans for employees to work from different locations, as well as remotely from home. Alternate site work arrangements are intended to balance and diversify our resources to minimize risk for an extended period, if required, while using today’s technology to be ever-present for our clients.
  • Our employees are being kept fully aware of the situation by our Executive Committee. We have established access to online company resources to help them manage during this unparalleled time.

Please be sure to keep us updated with your contact information so we may stay in touch with you.

We are confident that we are taking proper steps to ensure the continued operation of our business, and continue to follow guidance from official local, state and Federal Government and public health agencies, including the Centers for Disease Control (CDC). We will monitor and evaluate the situation and determine whether additional steps are needed to support our clients and communities.

We have strong financial talent who have the experience to weather all market cycles. We appreciate your trust and confidence in us. Please let us know if we can help in any way.

We wish you, your communities and your family all the very best.

Thank you,

William Sims
Managing Principal
HJ Sims

HJ Sims Closes Financings for Lenbrook, MRC Manalapan; Partners with Voralto for Acquisition

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

HJ Sims Closes Financings for Lenbrook, MRC Manalapan; Partners with Voralto for Acquisition

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 three transactions.

Lenbrook, a life plan community in Atlanta, GA, pursued financing for its recent Kingsboro at Lenbrook expansion. After a successful 2016 refinancing and a 2018 pre-development financing, Lenbrook again retained Sims to manage the financing process for the $107 million project. A priority  of Lenbrook’s was to maximize the ability to deleverage the debt of the financing without penalty. The entrance fee debt was maximized and the long-term debt amortized while permitting early repayment from turnover entrance fees.

 Sims coordinated a request for proposals to gauge interest in both the entrance fee and long-term debt. Due to the COVID-19 impact on bond markets and conduit bond issuers, Sims coordinated with the board and management of Lenbrook to pivot the transaction from tax-exempt financing consisting of bank short-term debt and long-term fixed rate bonds to taxable all-bank financing while closing early and achieving Lenbrook’s goal of maximizing deleveraging while maintaining flexibility. Fitch assigned a BBB- rating with stable outlook.

In Monmouth County, New Jersey, MRC Manalapan (MRC) is developing an assisted living and memory care community. MRC principals (and LV Development) collaborated with Springpoint Senior Living (Springpoint) to arrange the project and contracted with Springpoint to operate the community (Springpoint at Manalapan) under a long-term lease. Sims was engaged to implement debt financing supplemented by equity provided by the MRC principals.

Following a Sims-led solicitation, Peoples United Bank was selected to provide $14.3 million of taxable senior debt financing, incorporating a construction/mini-perm structure with a five-year balloon maturity. The loan includes tiered-interest rate pricing with reductions in loan credit spread following progression from construction, opening and stabilization. Primary security includes a revenue pledge and property mortgage. Supplemental security includes dual guarantees provided by the MRC principals and succeeded at completion by a limited tenant guaranty. Sims, Peoples and the financing team worked diligently with the MRC principals to secure final approvals, successfully closing in mid-May 2020.   

Established in 1977 and headquartered in Houston and Dallas, TX, Voralto is a 42-year-old senior housing owner/operator with a combined 120+ years of experience in the senior housing industry. Committed to growing the company through strategic acquisitions and new developments, Voralto currently owns/operates 8 assets totaling 590 beds in TX and GA. Sims was approached by Voralto to provide equity for the acquisition of an assisted living and memory care community in northern TX. Voralto’s business plan included the implementation of operational changes.

Sims formed a joint venture with Voralto to acquire the community. Sims’ equity provided liquidity to overcome any short-term performance issues resulting from COVID-19 and time to implement the business plan.

Scheduled to close in March, Sims and Voralto overcame challenges from COVID-19. Drawing from expertise of its bankers and investors, Sims underwrote Voralto’s business plan and provided a customized solution.

Financed Right®:

Non-profit: Aaron Rulnick: arulnick@hjsims.com | For-profit: Jeff Sands: jsands@hjsims.com

HJ SIMS: Founded in 1935, HJ Sims is a privately held investment bank and wealth management firm, headquartered in Fairfield, CT, with nationwide locations. www.hjsims.com. Investments involve risk, including loss of principal. This is not an offer to sell or buy any investment. Past performance is no guarantee of future results. Member FINRA, SIPC. HJ Sims is not affiliated with Lenbrook, MRC Manalapan, Voralto Funding I. Facebook, LinkedIn, Instagram Twitter.

HJ Sims Expands Investment Banking Team to West Coast, Midwest; Grows Private Client Team in Florida, Puerto Rico

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

HJ Sims Expands Investment Banking Team to West Coast and Midwest; Grows Private Client Team in Florida and Puerto Rico 

FAIRFIELD, CT HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935is pleased to announce the addition of two senior bankers as the firm expands with the opening of new offices in the Midwest and on the west coast. 

Lynn Daly joins Sims as Executive Vice President in its new Chicago location with 30+ years of experience working with nonprofit organizations in financing. Daly was acting head of Senior Living Investment Banking at BB&T Capital Markets, where she managed BB&T’s senior living relationships in the Midwest, facilitating financings of $1.3+ billion. Prior to BB&T Capital Markets, Daly spearheaded the Catholic Initiative within senior living investment banking for Ziegler, and served as Head of Allied Irish Bank’s Midwest region. Daly earned a BS in economics from Kalamazoo College, and an MBA from Northwestern University’s Kellogg Graduate School of Management.  

“We are so thrilled to welcome Lynn Daly to the HJ Sims family. Lynn is a well-respected and nationally recognized thought leader in the senior living sector and the perfect leader to grow our presence in the Midwest and to work with our team as we continue to expand throughout the US. Lynn’s extensive experience as both a senior commercial and investment banker, along with her integrity, deep knowledge, and client-centered approach, are vital characteristics and values that will guide our clients and business partners through these challenging times,” said Aaron Rulnick, Managing Principal, Sims. 

Brady Johnson joins Sims as Senior Vice President in its new west coast office, in Orange County, CAPreviously with Hunt Real Estate Capital, Johnson was responsible for real estate debt originations for seniors housing and healthcare properties. He helped establish the firm’s seniors housing real estate lending platform, including a proprietary bridge loan program and expansion of the firm’s agency and HUD financing capabilities. Johnson closed the firm’s first Fannie Mae seniors housing loan, followed by its first seniors housing Freddie Mac loan. Prior to joining Hunt, Johnson served as Director of Seniors Housing & Healthcare at RED Capital Group, and served with GE Capital in various commercial finance roles. Johnson earned an MBA from Thunderbird School of Global Management and Bachelor’s degrees (Economics and Spanish) from the University of Utah.  

“We are excited to welcome Brady Johnson to the Sims family. Brady will help establish our west coast presence serving for-profit and non-profit senior living clients. Brady’s broad experience in FHA, Fannie Mae, Freddie Mac, mezzanine and senior housing financeand his focus on achieving the best solutions for his clients make him a great asset,” said Jeffrey Sands, Managing Principal, Sims. 

In late 2019, Sims expanded its Private Client team, adding aoffice in Jupiter, FLhousing a three-person advisory team, as well as a senior partner of Sims Energy. HJ Sims’ Puerto Rico private client office moved its Guaynabo headquarters to a larger space iMetro Office Park. The spacious quarters enable the team to better host clients, while the expansion reinforces Sims’ established presence and growth on the island. 

HJ SIMS: Founded in 1935HJ Sims is a privately held investment bank and wealth management firm, headquartered in Fairfield, CT, with nationwide locations. www.hjsims.com. Investments involve risk, including loss of principal. This is not an offer to sell or buy any investment. Past performance is no guarantee of future resultsMember FINRA, SIPC. FacebookLinkedInInstagram Twitter. 

HUD Business During a Pandemic

The COVID-19 virus is having a profound impact on the nation, temporarily, but dramatically, affecting how we live and work. The virus is roiling the capital markets, and policies imposed to slow its spread have ground the economy to a crawl in many quarters. The mortgage banking team at Sims Mortgage Funding has taken to working remotely, linked to each other, our clients and our consulting and business partners electronically, and we will continue to operate this way until the “all clear” sign is announced.

In times of crisis there also is opportunity, and the COVID-19 virus proves no exception. Interest rates for HUD-insured loans have fluctuated wildly over the past few weeks, but the gradual tightening of spreads over the yield on 10-year US Treasuries and steps by the Federal Reserve to ensure liquidity into the government-backed securities markets, improving sale conditions, have created a very favorable climate for interest rates on HUD-insured loans.

How favorable? We are seeing indications of interest around 2.60% for HUD-insured refinancing loans and about 3.30% for construction and substantial rehabilitation loans. Please note that these rates exclude HUD’s annual mortgage insurance premiums, which range from .25% to .77% depending upon such factors as the project type, loan purpose, affordability restrictions, etc. These are terrific rates, reminiscent of what we saw in the HUD-insured loan markets during the Great Recession in 2008.

HUD has taken positive steps to remain operational by working remotely during the COVID-19 crisis. They have established procedures to process mortgage insurance applications and are working with our trade associations and third-party report providers to develop protocols for site and building inspections and appraisals. HUD also has developed arrangements for closings remotely – we’ll soon see how this works as we have a multifamily affordable refinance loan in the Southwest Region just starting the closing process.

HUD’s goal is to conduct business as usual during these difficult times – however, it remains to be seen how the negative economic conditions resulting from a national shutdown of the economy and the effects of COVID-19 on the senior housing sector will impact HUD’s review of new mortgage insurance applications. We are hearing anecdotally that HUD is contemplating increased reserves and other escrows for market-rate construction loans, and potential adjustments to project valuations to account for the impact of COVID-19. More to come there.

One of the central missions of HUD’s mortgage insurance programs is to provide credit support and liquidity to the housing and healthcare/senior capital markets during times of economic difficulty. Given the magnitude of the economic dislocation in the wake of the COVID-19 virus, HUD is expected to play an integral, and necessary, component in our national recovery.

We wish you and your families the best and hope that you are staying safe.

An Update on COVID-19 (Coronavirus)

As news on the coronavirus (COVID-19) continues to unfold following the declaration of a national emergency, we wanted to stay in touch regarding key details as well as how we may assist you during this unprecedented time. We also recommend following the Centers for Disease Control and Prevention (CDC) and World Health Organization (WHO) for the latest information.

In addition to previous recommendations regarding vigorous hand washing for at least 20 seconds and staying home when feeling ill, recent recommendations have centered on “social distancing” and “flattening the curve.”

Designed to slow down the spread of the virus, social distancing is a public health practice that involves staying at least six feet away from others and avoiding handshakes, hugs or other forms of physical contact. With the aim of preventing the public–-including those who are not yet showing symptoms-–from spreading COVID-19 or other illnesses, it also entails cancellations and closures, as evidenced by the number of school closures and event cancellations. As of March 15, the CDC recommended that gatherings of 50 people or more be avoided for the next eight weeks—it is important to realize this may change by publish date of this article as this is a very fluid situation.

To that end, social distancing can help flatten the curve or reduce spikes in the number of new coronavirus cases, which can stress an already taxed healthcare system. A flattened curve can decrease the spread and lead to better health outcomes for those who do fall ill.

If you are concerned about your investments and the recent market fluctuations, please reach out to your HJ Sims financial advisor at any time. Our team recommends diversifying and investing for the long-term, and we are happy to discuss individual strategies.

Finally, while it is important to stay informed, too much news can also be overwhelming. Do your best to take breaks and take care of yourself.

We want to hear from you

Do you have a topic suggestion for an article in a future issue of Sims Insights newsletter? We would love to hear from you. Share your ideas here.

 

The material presented here is for information purposes only and is not to be considered an offer to buy or sell any security. This report was prepared from sources believed to be reliable but it is not guaranteed as to accuracy and it is not a complete summary of statement of all available data. Information and opinions are current up to the date of publication and are subject to change without notice. The purchase and sale of securities should be conducted on an individual basis considering the risk tolerance and investment objective of each investor and with the advice and counsel of a professional advisor. The opinions expressed by Ms. Morrow are strictly her own and do not necessarily reflect those of Herbert J. Sims & Co., Inc. or their affiliates. This is not a solicitation to buy or an offer to sell any particular investment. All investment involves risk and may result in a loss of principal. Investors should carefully consider their own circumstances before making any investment decision.

HJ Sims 2020 Late Winter Conference Recap

Thank you!

On behalf of the entire HJ Sims Investment Banking team, we want to thank you for attending the 17th Annual HJ Sims Late Winter Conference at the InterContinenal San Diego in San Diego, California. We at HJ Sims are proud of our commitment to furthering conversation about financing methods & operating strategies in the Senior Living Industry. Bringing together a dynamic group of speakers from Non-Profit and Proprietary Senior Living Providers, as well as outside experts with thought-provoking views, it is our goal to have provided profound insight and an invaluable forum for exchanging ideas and information.

We also recognize that our conference was one of the last in-person events that was fortunate to take place. We appreciate those who attended, and we look forward to when we can get together in-person again.

Post-Conference Follow-Up

Our Conference Recap provides comprehensive coverage of the many sessions and event highlights from the 2020 HJ Sims Late Winter Conference.

Highlights include:

  • Keynote speakers from outside the senior living industry who shared valuable ideas from fields like Canyon Ranch® – the leader in luxury health and wellness introduced a potential new concept for senior living communities; Dr. Matthew Lieberman, a dedicated researcher on cognitive social neuroscience where we explored research indicating that we need to be connected socially to be physically and psychologically healthy; and Dr. Robert Genetski, an economist who led a discussion of the current financial markets where we explored principles vital to economic and political freedom.
  • Informal and memorable activities to bolster connection and conversation, included a glorious morning on the waters of San Diego Harbor for sailors and fishing enthusiasts; golfing at the world-renowned Torrey Pines; tasting a sample of San Diego’s best brewery and distillery products; and sharing an incredible evening with friends and a few new animal pals at the famed San Diego Zoo.
  • Educational sessions that covered topics such as: acute and post-acute care, medical and recreational cannabis, serving middle-income seniors, strategies to avoid moving from a stressed to distressed financial or operational situation, and a new approach to incorporating wellness in senior living.

In case you missed it, below are the details from our 17th Annual HJ Sims Late Winter Conference.

Agenda
Schedule and activities
Roster of conference speakers and their biographies

We invite you to watch the highlights of our conference in a recap video that features all the best parts of our conference. We also invite you to view the many beautiful photos from our conference.

Peruse the photo gallery and video montage below, and visit the HJ Sims FacebookInstagramLinkedIn or Twitter pages.

Taco Tuesday Dinner and Reception – LWC2020

San Diego Zoo Reception

Network Breaks

Corporate Social Responsibility: Gift of Life

The Gift of Life (GOL) team was thrilled to provide an update about the strong partnership between HJ Sims and GOL during the last two years, which has helped to promote the registry and subsequently add new donors, as well as supported numerous efforts to advance the GOL mission.

For more information on HJ Sims’ CSR program and Gift of Life, please visit: www.hjsims.com/servingourcommunitites.

Save the Date

Please save the date for next year, the 18th Annual Sims Late Winter Conference at the Sarasota Hyatt Regency, Sarasota, Florida. While we are still grappling with how we will hold our annual conference, rest assured, we will hold one… more to follow. Stay tuned, and stay healthy.

Thanks again!

Prevention of Coronavirus

With coronavirus or COVID-19 spreading to more cities, states and countries, awareness and concern also continue to grow. No matter where you live or what your age, it is important to take steps toward protection.

Following are several simple steps you can take to prevent illness and bolster your health:

  • Wash your hands for at least 20 seconds. Even regular hand washers often miss this mark – 20 seconds is about the time it takes to sing “happy birthday” twice. Determine a song of your choice or follow the second hand on your watch to ensure you are washing with soap and warm water for at least 20 seconds. If soap and water are not available, you can use an alcohol-based hand sanitizer that contains at least 60 percent alcohol.
  • Avoid close contact with anyone who is sick, no matter what the illness. If you are caring for someone who is sick, try to wear a mask. The CDC only recommends masks for those who are ill or caring for someone who is sick. Stay home if you feel unwell.
  • Avoid touching your face, particularly your eyes, nose and mouth. Also, avoid shaking hands for the duration of the virus.
  • Clean and disinfect surfaces regularly – this can include commonly touched areas such as doorknobs, light switches, computers, handles, phones, bathroom sinks, counters, toys and more.
  • Take care of your mental and physical health. Make sure you are eating well, drinking plenty of fluids, exercising and doing something to relieve any stress you may feel regarding the virus. Limit screen time, particularly if you find yourself getting overwhelmed by news or social media messages.

With symptoms including fever, cough, shortness of breath and body aches, coronavirus can be confused with influenza. Please contact your doctor’s office with any concerns.

To prepare your household, you can gather a two-week supply of non-perishable food staples and household supplies such as toilet paper, laundry supplies and diapers. It is also recommended to have at least a 30-day supply of prescription medications and other common health supplies (cold medicine, pain relievers) on hand. You may also want to create a plan in case of closure at work, daycare or school.

In addition, you can visit the Centers for Disease Control and Prevention (CDC) site for ongoing updates and information.

We want to hear from you

Do you have a topic suggestion for an article in a future issue of Sims Insights newsletter? We would love to hear from you. Share your ideas here.

 
The material presented here is for information purposes only and is not to be considered an offer to buy or sell any security. This report was prepared from sources believed to be reliable but it is not guaranteed as to accuracy and it is not a complete summary of statement of all available data. Information and opinions are current up to the date of publication and are subject to change without notice. The purchase and sale of securities should be conducted on an individual basis considering the risk tolerance and investment objective of each investor and with the advice and counsel of a professional advisor. The opinions expressed by Ms. Morrow are strictly her own and do not necessarily reflect those of Herbert J. Sims & Co., Inc. or their affiliates. This is not a solicitation to buy or an offer to sell any particular investment. All investment involves risk and may result in a loss of principal. Investors should carefully consider their own circumstances before making any investment decision.

Understanding TPAs-the Transfer of Physical Assets

Originating and underwriting HUD-insured loans for multifamily and healthcare projects is Sims Mortgage Funding’s primary activity, but sometimes our experience and success in that space leads us to other business opportunities. Such was the case earlier this month when Sims Mortgage Funding, Inc. (“SMF”) completed two consulting assignments in connection with the sales by our clients of two nursing homes in New Jersey and a hospital in California.

Both transactions involved the assumption of six existing HUD-insured loans that we originated in 2009, 2011, 2012 and 2017 and are spread across the three properties. Yes, HUD has an acronym to describe that process – TPA, which stands for Transfer of Physical Assets.

Under a TPA, HUD and the lender servicing the loan effectively “underwrite” the purchaser who becomes the new borrower on the assumed debt. Part of that process is to analyze the background, qualifications, and experience of the purchaser; the financial and operational projections of the property after the sale; and, the transfer of assets and discharge of liabilities at closing. SMF provided technical assistance in the development of the TPA applications relating to the new borrowers and helped shepherd the proposals through the HUD approval process and on to closings.

With the TPAs now completed, HUD has two new and accomplished healthcare organizations in their insured loan portfolio, and the borrowers have assumed long-term, fixed rate, non-recourse loans at competitive interest rates.

Subsidiaries of Hackensack-Meridian Health, the largest hospital system in New Jersey, acquired interests in Prospect Heights Care Center, a 196-bed nursing home in Hackensack, New Jersey, and West Caldwell Care Center, a 180-bed nursing home in West Caldwell, New Jersey.

On the west coast, a subsidiary of AHMC Healthcare acquired Parkview Community Hospital Medical Center, a 193-bed acute care facility in Riverside, California. AHMC, a for-profit organization, owns and operates seven “safety net” hospitals in Southern California. The two loans AHMC is assuming on Parkview will be their first HUD-insured loans – we certainly hope that they will not be their last!