HJ Sims Provides $4.6 Million Tranche B Loan for Skilled Nursing Acquisition
A nationally recognized owner and operator of healthcare properties and services partner partnered with a regional owner and operator (collectively the “Sponsor”) to pursue the acquisition of a portfolio two skilled nursing communities (the “Portfolio”). The national sponsor owns a substantial portfolio of healthcare properties across several states with multiple operating partners. Outside of its healthcare portfolio, the national sponsor invests in a wide range of healthcare products and services, as well as other strategic real estate and business opportunities. The regional sponsor has a significant operating presence in the market and the acquisition provided a strategic opportunity to leverage existing regional management infrastructure and to better service existing referral networks.
HJ Sims was approached by a representative of the Borrower to provide the B Piece of a unitranche financing to fund 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. HJ Sims proposed a unitranche financing structure to provide additional leverage to fund the acquisition, limiting the out-of-pocket equity requirement from the Borrower.
HJ Sims provided a $4.6 million subordinate tranche of a first mortgage loan (“Tranche B”), which in combination with the balance of the first mortgage loan (“Tranche A”) and equity from the Sponsor, was used to fund the acquisition. HJ Sims structured the Tranche B loan with a two-year interest only period and a three-year term, matching the term of the Tranche A loan. Through an affiliate of Herbert J. Sims Investments, LLC (“HJSI”), HJ Sims sold securities through its Private Client Group to fund the loan.
The HJ Sims Tranche B 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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