HJ Sims Advises Presbyterian Villages of Michigan on Financing Independent Living Rental Expansion Project

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FOR IMMEDIATE RELEASE             

October 15, 2020

CONTACT: Tara Perkins, AVP | 203-418-9049 | [email protected]

HJ Sims Advises Presbyterian Villages of Michigan on Financing Independent Living Rental Expansion Project

FAIRFIELD, CT– HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the successful September 2020 financing in the amount of approximately $38.18 million for Presbyterian Villages of Michigan (PVM), an award-winning non-profit, aging services network assisting people of all faiths and diverse communities across MI since 1945.

Sims completed its first financing with PVM in 2015, serving as underwriter for PVM’s Series 2015 bonds. Since 2015, Sims has continued to provide PVM with advisory services for planning future capital expansion projects, monitoring debt capacity and analyzing the obligated group structure.

In 2002, PVM acquired land immediately adjacent to its Village of East Harbor campus for an expansion project. In 2018, The Village of East Harbor completed a new Health and Wellness Center. The current project being financed comprises the final phase of the Health and Wellness Center project, and a new independent living rental expansion project known as Harbor Inn. The Harbor Inn campus will include 12 rental single-level ranch homes, 36 rental independent living units, and a three-story apartment building, encompassing 60 independent living units.

PVM’s board, based on analysis provided by Sims, decided to absorb the Harry & Jeannette Weinberg Green Houses at Rivertown Neighborhood (Weinberg) into the Obligated Group, in addition to adding Harbor Inn to the Obligated Group. Sims worked with PVM and Fitch Ratings to secure a “BB” rating for the new bond issuance, and existing Series 2015 bonds. Weinberg is a 501(c)(3) designated, MI non-profit corporation located in Detroit. PVM has a Use Agreement with PACE Southeast MI, a joint venture of Henry Ford Health System and PVM, for the exclusive use of the Weinberg. Absorbing Weinberg into the Obligated Group allowed PVM to refinance the Weinberg Green Houses’ outstanding CDFI debt as part of the 2020 tax exempt bond financing.

The financing successfully closed on September 30, consisting of $18.18 million of Series 2020A bonds underwritten by Sims, and $20 million Series 2020B direct placement draw-down bonds purchased by Huntington Public Capital Corporation.

The Series 2020B bonds were issued in a floating-rate mode and hedged with a forward-starting SWAP beginning at the end of the draw period, and cancellable in five years, as well as a seven-year final maturity matching the loan tenor. The projected combined cost of capital of the 2020A and 2020B bonds is 3.48%.

“Following up on the 2015 restructuring and financing, HJ Sims went back to work with PVM’s Board and management leadership to provide key guidance to PVM’s next steps in expanding and strengthening its Obligated Group, resulting in the 2020 restructuring and financing, remarkably during COVID-19. Sims provided excellent leadership to the financing team. PVM looks forward to working with our partners at Sims as we immediately explore other financing needs to expand and reposition our service offerings,” Said Brian Carnaghi, SVP of Finance and Business Development, CFO, Treasurer, PVM.

Financed Right® Solutions—Aaron Rulnick: [email protected], 301-424-9135 | Patrick Mallen: 301-448-7111,  [email protected].

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, Twitter,  Instagram.

HJ Sims Underwrites $135 Million Expansion for Phase II of the Toby and Leon Cooperman Sinai Residences of Boca Raton

FOR IMMEDIATE RELEASE             

October 5, 2020

 

CONTACT: Tara Perkins, AVP | 203-418-9049 | [email protected]

 

HJ Sims Underwrites $135 Million Expansion for Phase II of the Toby and Leon Cooperman Sinai Residences of Boca Raton

FAIRFIELD, CT– HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the successful September 2020 financing in the amount of approximately $135 million for the Toby and Leon Cooperman Sinai Residences of Boca Raton (Sinai). Located in Boca Raton, Sinai is a life plan community managed by Life Care Services comprised of 234 independent living units, 48 assisted living units, 24 memory-support units, 60 skilled nursing beds and common amenities. Sinai opened in January 2016 and achieved stabilized occupancy in less than a year. Sinai is located on The Jewish Federation of South Palm Beach County Florida campus.

 

The Sinai Board determined to undergo an expansion to add 111 independent living units to the community. Sinai and its development partner, LCS-D, had commenced pre-development work to shorten its post-financing construction period and were driving towards a September 15 vertical construction start, amidst COVID-19. Sinai experienced strong pre-sale velocity despite the pandemic, and achieved 70% pre-sales during the bond marketing process.

 

Due to the accelerated post-financing construction period, and Sinai’s track record of rapidly filling independent living units, coupled with COVID-19 impacted constraints on bank financing, Sims and the Sinai team issued tax-exempt fixed rate bonds for the entire expansion. Sinai financed a portion of its development costs with taxable bonds, creating a $5 million taxable tranche of Entrance Fee Principal Redemption Bonds®.

 

Sims underwrote Entrance Fee Principal Redemption Bonds® up to approximately 91% of the initial entrance-fee pool of the expansion. The Series 2020 Bonds were robustly oversubscribed, permitting adjustment of the scale on the pricing date such that the long-term bonds (2055 maturity) were priced at 5.00% to yield 4.60%, permitting Sinai to borrow approximately $135 million with only a $2.4 million increase in maximum annual debt service over their existing maximum annual debt service. Sims facilitated the implementation of modifications to Sinai’s existing master trust indenture – providing greater flexibility on testing of debt service coverage (switching to annual versus quarterly testing) to accommodate intra-year swings in entrance fee turnover.

 

“Once again, HJ Sims has provided their exceptional professional expertise providing pre-development and construction development financing, in the amount of $135 million, for the Phase II Expansion of the Toby & Leon Cooperman Sinai Residences of Boca Raton. Sims was the underwriter in 2014 for the $214 million bond issuance for the Sinai Residences initial start-up and development financing. Sinai Residences is now one of the most successful premiere luxury senior living facilities in the country.

The Sims’ team’s preparedness, availability, scheduling, communication, personal touch and extensive knowledge of the bond industry and markets allowed the Sinai Expansion project to be funded on-time and at exceptional rates. An owner could not ask for better representation. I look forward to the continuation of our outstanding relationship, and future funding opportunities, with Sims,” said Mel Lowell, COO, Jewish Federation of South Palm Beach County, and Board Member, Sinai.

Financed Right® Solutions—Aaron Rulnick: [email protected], 301-424-9135 | Melissa Messina: 203-418-9015,  [email protected] | Brady Richardson 443-340-9980,  [email protected] | Patrick Mallen: 418-9009,  [email protected].

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, Twitter,  Instagram.

 

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HJ Sims Secures $6.5 million Additional Debt Financing for Capital Improvements

FOR IMMEDIATE RELEASE

CONTACT: Tara Perkins, AVP | 203-418-9049 | [email protected]

HJ Sims Secures $6.5 million Additional Debt Financing for Capital Improvements

FAIRFIELD, CT– HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the successful August 2020 transaction in the amount of $6.5 million additional debt financing for capital improvements for the Philadelphia Protestant Home (PPH). PPH operates a continuing care retirement community in northeast Philadelphia, featuring 266 independent living units, 175 personal-care units and 126-bed nursing facility.

PPH has been funding capital improvements from general fund revenues. To efficiently manage cash-flow, PPH elected to finance $6.5 million of upcoming capital improvements. Sims, as financial advisor, developed a financing plan that provided for the funding of the required capital improvements, while implementing a structure that maintained maximum flexibility to maintain their debt service at manageable levels.

Prior to engaging PPH’s existing banking partner, Citizens Bank (Citizens), Sims worked with the PPH Fiscal Oversight Committee to develop structuring options. Following engagement of Citizens, Sims led the effort in working with Citizens to finalize the debt structure, within the confines of the bank’s requirements. Due to impacts of COVID-19, Sims negotiated a modified Debt Service Coverage test to the benefit of PPH. The additional obligations were structured as parity debt with PPH’s outstanding Series 2015 obligations.

Citizens provided $6.5 million of senior debt financing, fully amortizing in ten-years, and a five-year interest-only period followed by monthly principal amortization. The obligations were structured with a five-year, PPH-owned par call provision, and were issued on a tax-exempt basis through the Philadelphia Authority for Industrial Development (PAID). This provision was paramount as PPH’s existing Series 2015 Obligations mature in seven years, while Citizens could only defer principal on the Series 2020 obligations for five years. This call feature will allow PPH to restructure future debt at minimal cost.

Following closing of the Series 2020 Bonds, PPH locked in a synthetic fixed-rate on the debt. Sims served as Swap Advisor for the swap transaction, which also bears a mirroring, PPH-owned par termination right in five years, to align with the Citizens’ loan.

Sims, Citizens, PAID and the financing team worked diligently with PPH to secure final approvals, including navigating through unanticipated delays followed by the onset of COVID-19, to successfully close the financing.

“The HJ Sims’ commitment to incomparable client services has once again served The Philadelphia Protestant Home well. Despite the unforeseen challenges and uncertainly resulting from the pandemic, the Sims’ team provided valuable insight and unwavering advocacy to assure our financing needs were achieved. We are thankful for our partnership, the integrity, and collaboration with Aaron Rulnick and Siamac Afshar, for always putting what is in the best interest of PPH, first,” said John Dubyk, CEO, PPH. Philadelphia Protestant Home

Financed Right® Solutions—Aaron Rulnick: [email protected] or 301-424-9135 | Siamac Afshar: [email protected] or 267-360-6250.

ABOUT HJ SIMS: Founded in 1935, HJ Sims is a privately held investment bank and wealth management firm. Headquartered in Fairfield, CT, HJ Sims has nationwide investment banking, private client wealth management and trading locations. Member FINRA, SIPC. Facebook, LinkedIn, Twitter,  Instagram.

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Financing the Perception of Safety

FOR IMMEDIATE RELEASE

September 22, 2020

CONTACT: Tara Perkins, AVP | 203-418-9049 | [email protected]

Financing the Perception of Safety
Senior Living Survey Finds Residents Feel Safe, Glad to be Part of a Community during Pandemic 

FAIRFIELD, CT– HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, participated in the Senior Living COVID-19 Sentiment Report, which surveyed 4,000+ current and prospective senior living community residents, assessing their thoughts/ feelings about the COVID-19 pandemic. Lynn Daly, Executive Vice President, Sims’ Chicago office, authored content included in the 104-page report, COVID-19 Sentiment Report: A Survey of Independent Living Desirability & Safety.

The Survey, published by Plante Moran Living Forward and Retirement DYNAMICS®, was distributed to 23,000+ residents, prospective residents and staff at senior independent living communities nation-wide.

Among the results, it was discovered that of more than 4,000 current and prospective senior living community residents, 77% of current senior living community residents were somewhat or strongly supportive of living in a community during the Pandemic, with 87% of prospective community residents feeling somewhat or strongly glad to be living at home during the Pandemic. Click here to download the report.

While surveyed prospects worried about social isolation and daily tasks when living in their own homes, Survey results showed a slight decrease in their likelihood to move into an independent living community due to the Pandemic. The survey revealed:

  • 92% of staff felt their community responded well to Pandemic.
  • 93% of residents felt their community took all precautions.
  • 85% of staff agreed residents “are safer in their community than in their previous homes.”
  • 77% of residents said they were “glad to be living in a community during the Pandemic,” with 86% affirming they were glad they moved.
  • Prospective residents (61%) and residents (68%) felt socially isolated during shelter-in-place.
  • 74% of prospective residents reported their time frame for a move has been unchanged.

While independent living communities received high marks from seniors on cleanliness, sanitation and communications, communities earned low grades on recreation activities, dining and technology offered during shelter-in-place.

The Survey received a 21.1% overall response, and was sent to independent senior living communities throughout the U.S., generating 7,000+ comments. The results indicate that prospective senior living residents recognize that living in a community would provide them peace of mind, safety and security. However, they are happy to be home during the Pandemic. For senior living providers and operators, making small operational changes can improve prospective residents’ perceptions, with the hope that they will make the commitment and enjoy what moving to a campus would provide.

“HJ Sims is deeply passionate about the providers we serve. We appreciate that COVID-19 has stretched our provider clients in unimaginable ways, including resident and staff safety, retention/recruitment of staff, uncertainty and negative press. We welcome helping those in the industry become more knowledgeable about COVID-19 and are pleased to provide relevant data on what providers are doing right, and where they can improve to align themselves with the perceived needs of consumers and staff. We have tremendous faith in the non-profit senior living model and embrace the opportunity to support its sustainability and resilience,” said Daly.

Ms. Daly has 30+ years of experience working exclusively with nonprofit organizations on their financing needs. Read more here.

Lynn Daly: [email protected] | 312-505-5688.

ABOUT HJ SIMS: Founded in 1935, HJ Sims is a privately held investment bank and wealth management firm. Headquartered in Fairfield, CT, HJ Sims has nationwide investment banking, private client wealth management and trading locations. Member FINRA, SIPC. Facebook, LinkedIn, Twitter,  Instagram.

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HJ Sims Participates in the MoneyShow Virtual Expo

Tools for entirement®

The HJ Sims team experienced a successful first-time appearance as speakers at this year’s MoneyShow Virtual Expo, September 15-17. The event theme was Investment Strategies and featured thousands of attendees over the three-day run.

Our Test Your Stress: How in the World Is Your Portfolio? presentation highlighted HJ Sims Tools for entirement® and the strategic methods in which HJ Sims’ financial advisors can test client portfolios against dozens of world events, including economic, political and financial scenarios.

Our team was comprised of Geoffrey von der Linden, Senior Vice President; Eugene Chyzowych, Senior Vice President; and Joshua Davison, CIMA®, Director of Investments.

Additionally, HJ Sims hosted a dynamic virtual booth, including our videos, biographies, and foundational information about us and our rich 85+ year history.

We look forward to speaking at the next MoneyShow Virtual Expo in October for accredited investors.

Register for MoneyShow Virtual Expo October, featuring HJ Sims

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HJ Sims is a SEC registered Broker-Dealer, a member of FINRA, SIPC and is affiliated and under common ownership and control with a state registered investment advisor: Herbert J. Sims Capital Management, Inc. (HJSCM). Some HJ Sims financial professionals are dually registered as investment advisors with HJSCM and may therefore provide advice on HJSCM managed accounts. This material has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy. September 2020.

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HJ Sims is a SEC registered Broker-Dealer, a member of FINRA, SIPC and is affiliated and under common ownership and control with a state registered investment advisor: Herbert J. Sims Capital Management, Inc. (HJSCM). Some HJ Sims financial professionals are dually registered as investment advisors with HJSCM and may therefore provide advice on HJSCM managed accounts. This material has been prepared and is distributed solely for informational purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading or investment strategy. September 2020.

Repurposing Aging Senior Living Facilities to Affordable Senior Housing

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Background

Older senior housing communities, in particular skilled nursing facilities, face numerous financial and operational challenges.  For example, combinations of changing neighborhood demographics, shifting care option preferences, the presence of newer, modern competition and constraints on third-party reimbursement have increasingly caused nursing homes to struggle to maintain healthy occupancy ratios and cash-flow.  Often, when cash-flow is tight, repairs and improvements are delayed, if done at all; senior housing property executive management and their governing boards can reasonably ask:

  • Does it make sense to invest in a component of our campus that no longer may be as relevant?
  • Is our mission as an organization being limited or compromised because of an inefficient physical plant that no longer serves the needs of residents and potential new residents?
  • Are there repurposing options for older, inefficient buildings, and if so, how can they be financed?

These questions, important to all senior housing operators, are perhaps more acute for not-for-profit, mission-based organizations, who generally operate on tighter operating budgets.  Moreover, the option of selling a building on campus to outside, third-party interests, may be counterproductive to the overall reputation of the community, as the buyer may not operate the property in a manner consistent with the original charitable mission.  With so many aging senior living facilities facing financial hardship, creative measures must be taken to avoid eventual closures and bankruptcies.

One Solution: Conversion of a Portion of a Senior Housing Community to Affordable, Low-Income Senior Housing

The way forward may be the conversion of older, less-functional components of a senior housing campus, like a skilled nursing facility, to an affordable assisted living or age-restricted multifamily housing.

Such a conversion could serve the dual purposes of: (1) expanding the mission of a not-for-profit provider whose primary operation is in the market-rate sector and (2) addressing a dramatic shortage nationwide of affordable housing, especially for lower-income seniors.

Consider that the National Low-Income Housing Coalition reports that there are 7.2 million affordable housing units needed for low-income families and individuals across the country. By re-purposing healthcare or other older buildings on campus to affordable housing or assisted living, not-for-profit sponsors can avoid closures, unwanted sales to unrelated buyers, and financial hardship.

Key Element of Affordable Housing Finance: Low – Income Housing Tax Credits (LIHTCs)

One of the major challenges to the development of affordable housing is that there is typically a large gap between the costs of the project and the amount of financing that can be supported by operational cash-flow. In many affordable transactions, the gap is filled with equity generated from the procurement of Low-Income Housing Tax Credits (LIHTCs). These credits can significantly lessen the financial burden of conversion or repurposing senior living facilities into affordable assisted living or age-restricted senior housing.

LIHTCs provide developers and owners with a significant equity contribution towards the new construction, substantial rehabilitation, refinance, or acquisition of affordable housing projects. The program is administered by the Internal Revenue Service (IRS) through State Housing Finance Agencies and local Development Agencies. LIHTCs connect investors with sponsors and developers, providing the investors with considerable tax benefits over a period of approximately 10 years in exchange for their investment into the creation or preservation of affordable housing properties.

LIHTCs are generally available under two programs: 9% credits and 4% credits. The 9% credits cover more development costs but are extremely competitive to secure and often require a sponsor to commit to a higher degree of affordability with respect to rents and income limitations of residents. Moreover, the highly competitive and limited-supply 9% credit is typically reserved for new construction without any other federal subsidies.

The 4% credits, which often are accompanied by an allocation of tax-exempt multifamily housing revenue bonds, is typically allocated on a non-competitive basis. The 4% credits are considered part of the bond allocation, and given these credits are more accessible than their 9% counterpart and are available for repurposing existing buildings, the 4% execution will likely be the more likely product available.

In a typical LIHTC transaction, the credits would produce equity that covers anywhere from about 30% – 70% of the development costs associated with repurposing existing facilities into affordable housing. The LIHTC is equity, not to be repaid by the Project Owner. The typical Project ownership structure for LIHTC transactions is a Limited Partnership or Limited Liability Corporation, with the not-for-profit sponsor serving as a general partner or managing member and the tax credit investor acting as a limited partner or member. The not-for-profit sponsor can earn a development fee in a LIHTC transaction.

Debt Structures: HUD Mortgage Insurance as a Complement to 4% Credits/Tax Exempt Bond Financing

LIHTCs provide the equity for an affordable senior housing development; however, additional sources of financing will be needed to complete the capital stack.

Three HUD-insured mortgage loans can provide a source of financing for the debt component of a LIHTC transaction: Section 221(d)(4); Section 223(f); and Section 232 (assisted living). While a modest number of affordable assisted living facilities have been financed under the Section 232 program, the vast majority of HUD transactions that involve LIHTCs occur with the Section 221(d)(4) and Section 223(f) multifamily programs. (For a detailed summary of HUD’s mortgage insurance programs, please visit www.simsmortgage.com.)

The HUD 221(d)(4) program is the most likely option to accomplish the goals of a senior living sponsor to repurpose to affordable housing when the cost to renovate the property is higher than $40,000 per unit. This program is used for new construction and substantial rehabilitation and combines construction and permanent financing into one mortgage with an amortization and term of up to 40 years. Interest rates for the 221(d)(4) loans are currently in the low 3% range. The industry-best 40-year amortization lowers debt service payments, enhancing the feasibility of the Project.

Section 223(f) can be used when the cost of the renovation is less than $40,000 per unit. This program features a maximum 35-year amortization and current interest rates in the range of 2.50%. Both Section 221(d)(4) and Section 223(f) have .25% annual mortgage insurance premiums for affordable projects. These premiums are payable on the unpaid principal balance throughout the life of the loan.

A HUD-insured loan typically complements the tax-exempt bond financing that is needed “up front” to qualify for the 4% LIHTCs. That is because bond proceeds must be disbursed to pay project costs. However, the tax-exempt bonds are of limited duration, typically maturing after the rehabilitation is completed and the project is placed into service. The HUD-insured loan becomes the long-term financing after the bonds are redeemed post-rehabilitation.

LIHTC transactions often need additional sources of funding beyond the equity and tax-exempt bond/HUD debt. This funding can come from a variety of sources such as state grants or supplemental financing programs, Federal Community Development Block Grants (CDBG), HOME funds and deferred development fees.

Are LIHTCs for You?

The LIHTC process is complex and involves significant administrative and reporting activities once the project is placed into service; however, if utilized properly, tax-credits can be a uniquely beneficial tool to preserve or create affordable assisted living or age-restricted housing. This process is further complicated if the converted units are part of an existing building financed with taxable or tax-exempt debt under a Master Trust Indenture (MTI). While it’s not impossible to layer tax-credit debt into the existing capital stack, additional legal and advisory work would need to be done to determine the correct path forward.

Due to the highly complex nature of these transactions, LIHTC consultants are typically used to assist with the tax credit application and ensure IRS compliance issues are followed. Not-for-profit sponsors without LIHTC experience may partner with an experienced developer, who becomes part of the ownership structure, albeit in a limited control setting.

Sims Mortgage Funding, Inc. (SMF) would perform the upfront screening of the transaction from the LIHTC and HUD-insured loan perspectives, and would coordinate with our parent company, HJ Sims, on the identification of tax-exempt bond issuing agencies with access to 4% credits and the selection of the agency most suitable for the sponsor’s needs. Moreover, we may be able to recommend specific LIHTC developers, consultants and attorneys based on the sponsor’s geographic location. Finally, SMF would help the provider identify legal help to ensure the new debt works with the existing MTI debt on the campus.

For more information, please contact Johnny Sears at [email protected].

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.

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HJ Sims Completes Innovative Financing for New Independent Living Campus

FOR IMMEDIATE RELEASE

July 28, 2020

CONTACT: Tara Perkins, AVP Marketing Communications | 203-418-9049 | [email protected]

HJ Sims Completes Innovative Financing for New Independent Living Campus

FAIRFIELD, CT– HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the June 2020 closing of a $29.3 million financing for Presbyterian Senior Care’s Encore on the Lake (Encore), a new independent living community in North Strabane Township, Washington County, PA.

Encore will include 80 independent living apartments with underground parking, in a four-story building and is positioned to be affordable to seniors of modest means. The project is being undertaken in partnership with Senior Housing Partners (SHP), a subsidiary of Presbyterian Homes & Services (MN).

Encore is an affiliate of Presbyterian SeniorCare Network (PSCN) and parent organization Presbyterian SeniorCare (PSC). PSCN is a not-for-profit, faith-based, multi-site network serving 6,500+ older adults in Western PA, and offering a continuum of care to adults through 53 senior living communities, affordable housing facilities and at-home programs/services.

Sims has provided investment banking services to PSC and its affiliates, including financing in 2017 for construction of the Woodside Place memory care facility at PSC’s Washington campus, and 2019 refinancing/financing at Shenango on the Green. PSC engaged Sims to provide services for Encore, including exploration of financing options.

For this financing, Sims ultimately identified commercial bank financing as the preferred option for the majority or the financing, with the need for supplemental/subordinate financing to be determined upon completion of a bank solicitation and appraisal. Following a bank solicitation process, PSC selected First National Bank of Pennsylvania (FNB) as the commercial banking partner.

Elements of plan of finance implementation included: i) confirmation of appraised value, potential need for supplemental financing and source of financing and ii) finalizing the financing structure, including application of entrance fees, interest rate mode and debt security, and covenant provisions. Based on appraised value and loan-to-value requirements, supplemental financing was required with several of the considered options. PSC utilized additional bank financing, provided by Washington Financial Bank (WFB) and credit-supported by PSC.

The $29.3 million financing was comprised of $26 million of senior debt financing from FNB with a 28- year maturity combined with $3.3 million of supplemental financing from WFB with a 10-year maturity. Both components of debt, totaling $3.5 million, included portions to be repaid with some residency membership deposits following project completion and resident move-in. While the outbreak of COVID created uncertainty, the financing was successfully completed on June 30, 2020.

“For the third time, the Sims team partnered with PSCN to achieve success with a financing and favorable terms for another mission‐critical project, a new Independent Living rental model to serve moderate income older adults, which we hope to replicate. The Sims team did this in the midst of the disruptive COVID pandemic environment and a CFO transition. Our organization places great value on collaboration, and the Sims’ philosophy and culture align extremely well with ours,” said Paul Winkler, Chief Executive Officer, Presbyterian SeniorCare.

Financed Right® Solutions: James Bodine: 267-360-6245 | [email protected] or Siamac Afshar: 267-360-6250 | [email protected] or Patrick Mallen: [email protected] 203-418-9009.

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. Testimonials may not be representative of another client’s experience. Past performance is no guarantee of future results. Member FINRA, SIPC. Facebook, LinkedIn, Instagram Twitter.

 

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HJ Sims successfully Positions SearStone for Accretive Phase II

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July 22, 2020

CONTACT: Tara Perkins, AVP Marketing Communications | 203-418-9049 | [email protected]
HJ Sims successfully Positions SearStone for Accretive Phase II

FAIRFIELD, CT– HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce a June 30 closed financing in the amount of $6.6 million for Samaritan Housing, Inc. d/b/a SearStone Retirement Community (SearStone), a life plan community located in Cary, NC. SearStone consists of 131 independent living apartments, 38 independent living estate homes, 14 assisted living units and 25 skilled nursing beds. The assisted living and skilled nursing services are offered at the Brittany Place Healthcare Center (Brittany Place).

Sims financed the first phase of SearStone with a $117.5 million non-rated fixed rate bond issue in June 2012 and an expansion of the Healthcare Center in 2016 with an $8 million issue. Sims provided the original seed capital, and the funds to advance refund the 2012 issue, and provided a portion of the pre-development capital for the Phase II expansion in 2017. Given the growing demand for independent living units, planning commenced for a Phase II expansion project and pre-development costs were funded with $5.5 million of proceeds from the Series 2017B Bonds. Phase II should double the size of SearStone and is projected to be financially accretive; additional pre-development capital was needed. Phase II is known as the Highview at SearStone and contemplates the addition of 152 independent living units, 28 assisted living units (14 specialized memory care units) and 24 skilled nursing suites. New dining venues, along with additional common and green spaces will be also provided.

Sims successfully underwrote $4.6 million of tax-exempt bonds and $2.0 million of taxable bonds to provide supplemental pre-development capital for Phase II, scheduled for financing in early 2022.The financing was completed as one of the first non-rated senior living financings placed in the bond market since COVID-19, and provided close to $6 million of expendable proceeds, that combined with remaining funds from the Series 2017B Bonds and $1 million+ in borrower equity, will fund predevelopment costs associated with the Phase II.

With Sims’ leadership and the collaborative work of SearsStone’s senior management team, Board, Management Company (Retirement Living Associates), Developer (Greenbrier) and the financing working group, SearStone successfully completed the financing and obtained bondholder consent to issue the proposed debt; secured sufficient pre-development capital to pursue Phase II; and provided covenant relief and maintained sufficient operating, financial and strategic flexibility to implement the future expansion to optimize its campus.

“SearStone has once again benefitted from the superb leadership of Aaron Rulnick and the Sims team. Our financing would have been challenging in any environment, but we were facing a tight time-frame in a market shut-down by COVID. Sims worked tirelessly and creatively to overcome obstacles, and we are so pleased with the result. SearStone can continue to pursue the Highview Expansion project, which will right-size and optimize our campus, with the financial resources and flexibility we need to be successful,” said Stan Brading, President, Samaritan Housing Foundation, Inc.

Financed Right® Solutions: Aaron Rulnick: 203-418-9008 | [email protected] or Tom Bowden:-804-398-8577 | [email protected].

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. Testimonials may not be representative of another client’s experience. Past performance is no guarantee of future results. Member FINRA, SIPC. Facebook, LinkedIn, Instagram Twitter.

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Encore on the Lake

HJ Sims completes innovative dual bank senior – supplemental debt financing for Encore on the Lake. This new middle market independent living campus is a planned 80-unit Independent Living Community to be constructed on a 6.8 acre site in North Strabane Township, Washington County, PA.

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Advance Refundings

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Consider Supporting the Reinstatement of Advance Refundings

Advance refundings are a critical tool to help state and local governments and 501(c)(3) organizations lower their debt costs. 

Nearly three years ago, advance refundings were eliminated as part of the Tax Cuts and Jobs Act of 2017. At the time, the assumption was that the borrowers of tax-exempt bonds used to finance advance refundings would access the taxable bond market if an advance refunding was necessary. While taxable advance refunding volume has increased over the past two years, non-rated borrowers and smaller advance refundings have been essentially locked out of the taxable bond market.  

Taxable municipal bond investors are not as prolific as tax-exempt municipal bond investors. The taxable muni market tends to focus more strongly on rated credits with considerable size. This leaves non-rated conduit borrowers, especially non-rated 501(c)(3) institutions like rural hospitals, universities and senior living communities at risk because they do not have access to the same markets to refinance higher coupon debt.

On July 1, 2020, eight bipartisan senators came together to introduce the LOCAL Infrastructure Act that reinstates advance refundings as a critical tool to help state and local governments and 501(c)(3) organizations lower their debt costs. Senators Roger Wicker (R-MS), Debbie Stabenow (D-MI), Michael Bennet (D-CO), Shelley Moore Capito (R-W.Va.), John Barrasso (R-WY), Bob Menendez (D-NJ), Jerry Moran (R-KS), and Tom Carper (D-DE) cosponsored the legislation. There is also legislation in the House that includes the reinstatement of advanced refundings. In light of this, we believe that now may be the best time to restore advance refundings.

How Can You Take Action

Write a letter to your U.S. senator appealing for their help to restore advance refundings through the Senate Finance Committee bill. Help the eight senators who have already come together to co-sponsor the LOCAL Infrasturcture Act.

The draft letter below is written from the perspective of a board member or officer at a non-profit senior living community.

Letter Text

Greetings,

I am a constituent of the Senator and the [_________________] of [____________________], a senior living community in the Senator’s state. I understand a bipartisan group of senators led by Mr. Wicker of Mississippi recently introduced the LOCAL Infrastructure Act, which would restore advance refunding bonds, and I would like to encourage the Senator to consider the legislation and assist in its passage in the Senate.

Use of tax-exempt advance refunding bonds has not only saved state and local governments billions of dollars, but it has also provided 501(c)(3) senior living communities similar to ours the opportunity to refinance our debt and restructure covenants in the past. If advance refundings were to be restored, it would allow more comprehensive services, including infrastructure projects and enhancements to senior living communities, to be completed at a lower cost. This tool would provide an opportunity for 501(c)(3) senior living communities as well as state and local governments to recover faster from the effects of the COVID-19 pandemic and to efficiently access low interest rates to provide essential facilities and services to your constituents.

As a result of the COVID-19 pandemic, many senior living communities, state and local governments and other obligors of tax-exempt bonds are experiencing dire financial situations, and some are having difficulty paying scheduled principal and interest on their outstanding debt. It would greatly benefit such entities to be able to refinance their debt at today’s interest rates that are often lower than the interest rates payable on outstanding debt, which often was issued years ago. While there has been a surge of taxable municipal bond issuance to advance refund debt in recent months, the investors in those bonds will typically purchase transactions of considerable size and with high investment grade ratings. This leaves the super-majority of senior living communities without a viable option to refinance debt at a time when the Federal government has brought bank lending rates down to less than 0.25% and municipal bond indices are hovering around all-time lows. Many senior living communities that have debt that would be beneficial to refinance today issued that debt between 2011 and 2015 where the municipal bond index was 2-3% higher than where it is today. This could save senior living communities millions of dollars, benefitting your constituents.

These advance refundings could even allow senior living communities to defer debt service in the near term to respond to cash flow issues as a result of the pandemic. As communities’ existing debt is often paid with healthcare revenues and other revenues received from residents, these streams have been interrupted as some communities have been hard hit by COVID-19 infection and others have locked down all ability for new residents to move-in.

If you would like more information on how advance refundings could benefit senior living communities in general, please do not hesitate to connect with an HJ Sims Investment Banker at [email protected]. HJ Sims is a privately-owned investment bank that was founded in the midst of the Great Depression and was the first investment bank to finance a senior living community with tax-exempt bonds after the advent of Medicare in 1965.

We believe strongly that the reinstatement of advance refundings would be a tool that could provide significant savings to the senior living industry at a time when providers need all of their tools available to provide low cost care to the most vulnerable population. We encourage you to consider supporting this bipartisan effort to help state and local governments and 501(c)(3)s like ours.

Thank you.

Senate Finance Committee Members

State
Party
Senator
Website
CO
D
Michael Bennet
Already a cosponsor, but would help to support ARs. https://www.bennet.senate.gov/public/index.cfm/write-to-michael
DE
D
Thomas Carper
Already a cosponsor, but would help to support ARs. https://www.carper.senate.gov/public/index.cfm/email-senator-carper
IA
R
Chuck Grassley
https://grassley.senate.gov/constituents/questions-and-comments
ID
R
Mike Crapo
https://www.crapo.senate.gov/contact/email-me
IN
R
Todd Young
https://www.young.senate.gov/contact/email-todd
KS
R
Pat Roberts
Already a cosponsor, but would help to support ARs. https://www.roberts.senate.gov/public/index.cfm/emailpat
LA
R
Bill Cassidy
Contact
MD
D
Ben Cardin
https://www.cardin.senate.gov/contact/email-ben
MI
D
Debbie Stabenow
Already a cosponsor, but would help to support ARs. https://www.stabenow.senate.gov/contact
MT
R
Steve Daines
https://www.daines.senate.gov/connect/email-steve
NC
R
Richard Burr
https://www.burr.senate.gov/contact/email
NE
R
Ben Sasse
https://www.sasse.senate.gov/public/index.cfm/email-ben
NH
D
Maggie Hassan
https://www.hassan.senate.gov/contact/email
NJ
D
Robert Menendez
Already a cosponsor, but would help to support ARs. https://www.menendez.senate.gov/contact
NV
D
Catherine Cortez Masto
Contact
OH
R
Rob Portman
https://www.portman.senate.gov/meet/contact
OH
D
Sherrod Brown
https://www.brown.senate.gov/contact/email
OK
R
James Lankford
Home
OR
D
Ron Wyden
https://www.wyden.senate.gov/contact/email-ron
PA
R
Patrick Toomey
https://www.toomey.senate.gov/?p=contact
PA
D
Robert Casey, Jr.
https://www.casey.senate.gov/contact
RI
D
Sheldon Whitehouse
Email Sheldon
SC
R
Tim Scott
Email Senator Scott
SD
R
John Thune
https://www.thune.senate.gov/public/index.cfm/contact
TX
R
John Cornyn
https://www.cornyn.senate.gov/contact
VA
D
Mark Warner
https://www.warner.senate.gov/public/index.cfm/contact
WA
D
Maria Cantwell
https://www.cantwell.senate.gov/contact/email/form
WY
R
Michael Enzi
Already a cosponsor, but would help to support ARs. https://www.enzi.senate.gov/public/index.cfm/e-mail-senator-enzi

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 Facebook, Instagram, LinkedIn 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!

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

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FAIRFIELD, CT– HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is 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 non-profit 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, CA. Previously 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 finance, and 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 an office in Jupiter, FL, housing 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 in Metro 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 Closes Financings for Lenbrook, MRC Manalapan; Partners with Voralto for Acquisition

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CONTACT: Tara Perkins, AVP Marketing Communications | 203-418-9049 | [email protected]

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: [email protected] | For-profit: Jeff Sands: [email protected]

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

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CONTACT: Tara Perkins, AVP Marketing Communications | 203-418-9049 | [email protected]  

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 1935, is 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 non–profit 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, CA. Previously 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 finance, and 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 an office in Jupiter, FL, housing 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 in Metro 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 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. Facebook, LinkedIn, Instagram Twitter. 

HUD Business During a Pandemic

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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)

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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.

Prevention of Coronavirus

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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.

How to Cultivate a Green Thumb This Spring

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Gardening and getting your hands a little dirty by digging in the soil can be an incredibly healthy hobby: Gardening can reduce depression and anxiety, help people lose weight, and increase quality of life and overall sense of community, according to Science Direct.

Not everyone, however, is a natural-born gardener – it takes time and trial and error. If your previous efforts at growing plants and flowers, or fruits and vegetables, have been less-than fruitful, there is hope.

Check out the following helpful hints for cultivating your very own green thumb:

  • Relax. Even the best gardeners in the world have made plenty of mistakes. Recognize that Mother Nature can be fickle, weather is not predictable and perfection is not really the goal. Rather, half the fun can be in the planting, watering and watching.
  • Plan. Depending on where you live, you will likely have more success with plants that grow well in that area. The National Gardening Association shares a zone map that can help you learn more about your location and what might grow well there. You can also talk to others about hardy plants that tend to thrive where you live.
  • Enlist help. Invite family or friends to contribute to your garden – kids are often more willing to eat vegetables they have grown themselves – or check out local community gardens. You can quickly double your expertise when you engage others in your planting and growing efforts.
  • Keep it simple. You can consult with a local nursery center to determine the best options for your garden. Peppers, tomatoes, basil, onions and chard as well as sunflowers and dahlias are often great starter choices. You can always expand in the future.
  • Gear up. A shovel and gardening gloves are good tools to have on hand. Garden scissors and a small trowel may also come in handy. Perhaps, some knee pads will offer comfort when you are digging in the dirt, planting seeds and tending to the garden.
  • Water and weed. You will not need to dig into the soil every day, but pay attention to how your garden is looking and growing. Ensure plants are watered regularly and that weeds are removed at least weekly. A little maintenance can go a long way towards creating an attractive and functional garden.

Finally, you can always consult with local experts at the growing number of farmer’s markets, nurseries or gardening groups. Many of these green thumbs would love the chance to share their passion with you and offer more tips on growing a gorgeous garden this year.

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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.

HUD Goes All-In on OZs

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By Anthony Luzzi

The 2017 Tax Cuts and Jobs Act created a new tax incentive known as Qualified Opportunity Funds, to spur new investment in low-income communities located in certain Census Tracts that are designated by the Secretary of the Treasury as Opportunity Zones, or OZs. There are approximately 8,700 OZs nationwide and in the US Territories, including Puerto Rico, where approximately 94% of La Isla Encantada qualifies.

We’ll leave it up to the legions of lawyers and accumulation of accountants to describe the mechanics of investing in Opportunity Funds and how private investments in these OZs are eligible for potentially significant capital gains tax relief. But we can tell you about some of HUD’s recent initiatives to promote development and investment in OZs through its multifamily mortgage insurance programs.

HUD has designated specialized Senior Underwriters in each region of the country to process applications for mortgage insurance for properties in qualified OZs. This will ensure expert and expedient review of these applications by HUD underwriters.

Properties located in qualified OZs will be eligible for reduced mortgage insurance application fees. Market-rate and affordable deals will see their application fees reduced by 33%, from .3% to .2%. “Broadly affordable” deals will have a steeper 66% discount on its application fees, as they will be reduced from .30% to .10%. What’s a broadly affordable project? They have at least 90% of units covered by a Section 8 Project Based Rental Assistance (PBRA) contract; or at least 90% of its units covered by an affordability use restriction under the Low-Income Housing Tax Credit program.

Last summer, HUD Secretary Carson announced that the Section 220 mortgage insurance program, historically used to finance mixed-use rental projects in specially-designated “downtown” urban-renewal areas and other areas where local governments have undertaken designated revitalization activities, will now be available in all of the approximately 8,700 Opportunity Zones.

The introduction of Section 220 into all Opportunity Zones has the potential to be a game-changer, as HUD expects it will promote more economic activity, both commercial and residential, in low-income, economically distressed areas that have not experienced a great deal of growth in recent years.

Section 220 underwrites similarly to HUD’s “mainstream” Section 221(d)(4) program for multifamily new construction and substantial rehabilitation. Both have 40-year loan amortizations, loan-to-cost ratios ranging from 85% to 90%, and debt service coverage ratios from 1.11 to 1.17. Both programs limit the maximum amount of commercial space to 25% of the total project area, but under Section 220, the maximum amount of commercial income in a project can be 30% of the total income, double the Section 221(d)(4) limit. In addition, under Section 220, 20% of the cost of project’s non-residential components can be added to the calculation of the mortgage based on statutory unit limitations; the Section 221(d)(4) limit had been 15% until recently, when it was increased to 20%.

We applaud the intent of the Tax Cuts and Jobs Act to spur economic development in disadvantaged communities, and HUD’s efforts to maximize the impact of the Act through its multifamily mortgage insurance programs. We are currently developing a mortgage insurance application for a Louisiana rental project in an urban area that also is designated an OZ. Keep tuned to this space for updates on this deal.