Forest Hills decided to use a targeted approach when searching for an affiliation partner. They asked HJ Sims to go out to a short list of potential candidates based on the organizations’ knowledge of the DC market and interest level with partnering with an assisted living/ skilled nursing provider. Further, Forest Hills wanted a not-for-profit provider that was aligned with its mission towards innovation and care for the workforce. During the affiliation search, Forest Hills also received multiple offers for their memory care facility and worked with their broker to select a buyer that offered the greatest purchase price as well as the lowest perceived execution risk.

Forest Hills received two letters of intent from the three organizations they approached for the affiliation. The organization aimed to ensure they received a guaranteed investment in the community’s physical plant, as well as the necessary support to improve operations. Based on the proposals, Forest Hills selected Goodwin Living as their affiliation partner.

As part of Goodwin Living’s letter of intent, they required that Forest Hills complete the sale of the memory care facility prior to closing on the affiliation, recognizing the impact that the divestiture would have on improving the underlying credit. In late 2023, negotiations over the key legal documents
in the divestiture broke down with the buyer. Forest Hills worked to pivot to solicit revised proposals from the initial buyer pool, eventually receiving a
new offer from a nearby high-school interested in owning the real estate. While the new purchase price was lower than before due to changes in the market,
the price was high enough that it made sense to move forward with the sale. With a new buyer in hand, they began working through the due diligence
and documentation process in early 2024.

Due to the inflationary pressures throughout 2022 and 2023, Forest Hills missed their debt service coverage ratios in each year. Under the bond
documents, this resulted in an event of default in early 2024. HJ Sims worked with Forest Hills to schedule an in-person investor meeting to discuss the ongoing divestiture and affiliation processes, both of which were confidential at the time. The investors agreed to sign NDAs to allow for the meeting. Forest
Hills presented their plan to improve their financial performance by paying down debt and affiliating with Goodwin Living, which would allow for a significant
reinvestment in the community. The bondholders informally accepted the plan and directed trustee’s counsel to begin negotiations over a forbearance
agreement. Shortly after the meeting with the bondholders, Goodwin Living agreed to manage the community until the affiliation was completed.

Over the summer, the sale of the memory care facility became delayed due to a zoning issue the buyer raised during due diligence. The process to clear up
the zoning issue would require several months of allowing time for the public to comment through public hearings. By the late fall in 2024, the zoning
process was complete and the buyer was ready to purchase the community and HJ Sims assembled the working group to prepare for the partial defeasance
of Forest Hills’ outstanding debt. In early November, Forest Hills was able to pay down a portion of their debt, which resulted in $750,000 in annual debt
service savings.