Acquisition Financing Expands 110-Year-Old Senior Living Organization
“I highly recommend Aaron Rulnick for his critical thinking, strategic nature, and willingness to advocate for what is in the best interest of the client. He has a long term view – focused on a long term relationship – and was instrumental in getting the financing done in a very short timeframe.”
– Adriene Iverson, President and Chief Executive Officer, Elder Care Alliance
Elder Care Alliance (“ECA”) is a non-profit organization based in Alameda, California that has served seniors and their families throughout California for the last 110 years. The mission of ECA is to enrich the holistic wellness of older adults through education, innovation and a network of professionals. ECA’s communities offer a variety of services, including assisted living, memory care, skilled nursing and independent living. In 2016, HJ Sims (“Sims”) was engaged in an advisory capacity to assist in formulating the ECA Growth Initiative, a long-term plan focused on achieving organizational expansion through strategic acquisitions.
For its inaugural purchase, ECA targeted The Villa at San Mateo (“VSM”), a 135-unit independent living community located on a 4.5-acre campus 20 miles south of San Francisco and 15 miles north of Palo Alto. Originally constructed in 1957 as the Villa Hotel, VSM was converted to apartments in 2006 and currently consists of one- and two-bedroom apartment homes averaging approximately 755 square feet. Acacia Capital purchased the asset in July of 2010 and had remained owner of the property in 2016. Although the acquisition of this multi-family facility was outside of ECA’s core acquisition strategy, as an active-living community in the thriving San Francisco Bay Area, the VSM addition was viewed as a valuable opportunity to expand the organization and better fulfill its mission.
With an acquisition target in place, Sims worked closely with ECA and its Real Estate Consultant, Rockwood Pacific, to carefully evaluate financing alternatives. Initially, Sims held discussions with several national and regional commercial lending institutions to assess the viability of non-recourse bank acquisition financing. While this funding vehicle offered competitive interest rates, the lower loan-to-value constraints and greater ECA financial guarantees required by banks proved highly onerous and cost-prohibitive. As such, Sims and the financing team still faced the challenge of securing low-cost financing with competitive terms while achieving ECA’s objective of completing the acquisition financing by the end of calendar year 2016. Ultimately, Sims served as ECA’s financial advisor to secure a Fannie Mae loan, which afforded ECA with non-recourse debt featuring flexible loan terms, competitive pricing, reduced issuance costs and an expeditious execution process.
Working with ECA, Rockwood Financial and Fannie Mae program lender CBRE, Sims assisted in the structuring of a $46.5 million acquisition of VSM, funded through a $30.4 million debt financing and $16.1 million equity contribution. Sims played an integral role in affording ECA with a streamlined transaction execution process. Despite a highly compressed timetable, ECA was able to successfully close the VSM acquisition financing on December 30, 2016, in advance of the 2017 deadline. Including this transaction, ECA currently serves approximately 660 residents on five campuses across California.
For more information on how ECA was Financed Right® by HJ Sims, please contact: