HJ Sims Provides $6.0 Million Mezzanine Loan for Nursing Home Acquisition
A national recognized owner and operator of healthcare properties and services (the “Sponsor”) was pursuing the acquisition of a portfolio two skilled nursing communities (the “Portfolio”). The Sponsor owns a substantial portfolio of healthcare properties across several states with multiple operating partners. Outside of its healthcare portfolio, the Sponsor invests in a wide range of healthcare products and services, as well as other strategic real estate and business opportunities. The Sponsor partnered with a regional owner and operator who will operate the Portfolio.
HJ Sims was approached by a representative of the Borrower to provide subordinate financing to supplement a senior loan in funding the acquisition of the Portfolio. As part of its acquisition plan, the Borrower identified and planned to implement multiple operational improvements to improve financial performance. After implementing the planned operational improvements, the Borrower intended to seek permanent financing to refinance outstanding debt. HJ Sims proposed a subordinate mezzanine loan providing additional leverage to fund the acquisition, limiting the out-of-pocket equity requirement from the Borrower.
HJ Sims provided a $6.0 million mezzanine loan, which in combination with a senior loan and equity from the Sponsor was used to fund the acquisition. HJ Sims structured the mezzanine loan with a two-year interest only period and a five-year term, matching the term of the senior loan. The subordinate loan carries a fixed interest rate, ensuring a fixed cost of capital in a rising interest rate environment. Through an affiliate of Herbert J. Sims Investments, LLC (“HJSI”), HJ Sims sold securities through its Private Client Group to fund the mezzanine loan.
The HJ Sims’ mezzanine loan fit the needs of client, providing a high-leverage solution allowing the Sponsor to, (a) better allocate capital for other acquisition targets and support of existing assets, and to (b) avoid diluting ownership in the portfolio from taking on additional equity partners.
HJ Sims excels in providing customized debt and equity capital for senior living providers utilizing a variety of direct financing solutions including equity, preferred equity, mezzanine debt, and high leverage first mortgage loans, tailored to meet the unique financing needs of valued partners.
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