Innovative Financing Strategies Create Operational Cashflow during COVID-19

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

 FAIRFIELD, CT– HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the closing of a number of financings utilizing innovative financing strategies to create operational cashflow and advantageous results for senior living organizations.  

The Tax Cuts and Jobs Act of 2017 (the 2017 TCJA) had an enormous impact on the municipal bond market with the elimination of advance refundings. In 2018, Sims identified alternative strategies in the absence of advance refundings. Strategies included (1) Cinderella bank-held bonds, (2) taxable fixed rate advanced refundings, (3) forward refundings and (4) tender offers.


The use of Cinderella Bonds aims to secure an advance refunding that is at first taxable and converts to tax-exempt when permitted. It was applied to the financing of Marshes of Skidaway Island (The Marshes) in GA. In 2020, Sims approached The Marshes noting that a bank-placed Cinderella refinancing of outstanding fixed rate bonds would provide significant savings. Sims successfully closed the $47.1 million financing in December 2020, saving approximately $1.14 million annually and $15.36 million, in the aggregate, through a bank financing.


Westminster Communities of Florida, the largest provider of life plan communities in the State of FL, employed Sims to utilize a taxable fixed rate advance refunding of bonds issues to acquire Glenmoor after its successful turnaround. Sims analyzed bank-held and fixed rate bond advanced refundings, with a rapidly growing taxable fixed rate bond market. Westminster proceeded with a taxable advanced refunding and tax-exempt new money issuance to fund upcoming capital projects. Sims procured strong investor interest in the successful $107,360,000 transaction, achieving superior execution.


A Forward Refunding approach was utilized with Peconic Landing at Southold (Peconic) in NY. This strategy utilizes tax-exempt fixed rate bonds priced on a present-day basis, but not delivered and “closed” until ninety days prior to the call date of the refunded bonds. In 2019, Sims discussed potential refunding of Peconic’s bonds. The elimination of tax-exempt advance refundings meant immediate access to the tax-exempt market wasn’t possible, and the current BBB- rating made access to the taxable bond market impractical. Sims helped facilitate a forward refunding, securing pricing on a 20-year term on the refunding in late 2019 and saving Peconic $300,000+ in annual debt service with the ultimate settlement occurring in November 2020 amidst the COVID-19 pandemic.


A Tender Offer financing was implemented for the MD Obligated Group of Asbury Communities (Asbury). In 2018, Asbury MD Obligated Group’s capital stack was comprised of outstanding bonds placed directly with an institutional investor without an optional call feature and with a balloon payment. Sims negotiated an exchange of the bonds at a purchase price for a new series of bonds, extending the amortization, providing additional years of repayment and reducing the overall debt burden.


The 2017 TCJA changed the borrowing landscape for 501(c)(3) organizations. As the new administration and Congress identify and implement their fiscal policies, the Sims’ Financed Right® approach will ensure Sims will continue to assist clients in navigating the ever-changing market landscape, as we monitor market response to new laws and update the industry of developments and trends.


To learn details about each strategy, read the Sims Perspective, click here.


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. Past performance is no guarantee of future results.  Facebook, LinkedIn, Twitter,  Instagram.