HJ Sims Assists Landis Homes in Securing Bank Financing for a New Independent Living Campus in Downtown Lancaster and Refinancing of Variable Rate Bank Debt with Fixed-Rate Bond Debt
“HJ Sims has been a great partner with Landis Communities as we sought financing for a new 79-apartment middle-income senior housing project in downtown Lancaster, PA, along with refinancing our variable rate debt with very favorable long-term debt. The Sims team demonstrated a singular focus on our financing needs that is important to fulfilling our mission of honoring and enriching the lives of those we serve.”
– Larry Zook, Chief Executive Officer, Landis Communities
“HJ Sims was an excellent partner for Landis Communities during our recent financing transactions. Having one transaction moving forward is difficult enough, we had two separate financings moving on parallel tracks. The team at HJ Sims was well prepared, extremely organized, and gave each transaction exactly what was needed for success. They negotiated hard, executed a great amount of due diligence, and structured the two financings to meet our individualized needs. We are grateful to have HJ Sims as our partner.”
– Corey Hamilton, Chief Financial Officer, Landis Communities
Founded in 1964, Landis Homes, also known as Landis Homes Retirement Community (LHRC), operates a Continuing Care Retirement Community in Lititz, Pennsylvania on a 114-acre campus surrounded by Lancaster County farmland. Landis Homes is a wholly-owned subsidiary of Landis Communities (Landis) who also operates a home and community services subsidiary (Landis HCBS) and a middle-market housing subsidiary (Landis Quality Living (LQL)). As of 2021, LHRC serves approximately 850 residents and nearly 50 adult day service clients. More than 500 full-time employees and additional volunteers provide a continuum of services, including residential living in cottages, apartments, and residential suites, personal care, healthcare, memory support and adult day services. The campus is comprised of 476 Residential Living units, 33 Residential suites, 97 Personal Care units and 103 Health Care units. In addition, Landis at Home provides services to approximately 140 people both at the community and in the broader Primary Service Area.
Following an in-depth RFP process, HJ Sims was hired to assist Landis in connection with securing financing to develop and build Landis Place on King (LPK), a mixed-use development, which upon completion, in the fall of 2022, will bring 79 middle and lower income seniors’ apartments to downtown Lancaster, Pennsylvania. In addition, HJ Sims was hired to assist in the permanent refinancing of three outstanding variable rate bank loans and to provide additional capital for renovations and improvements to existing facilities.
HJ Sims evaluated financing alternatives for LPK, ultimately determining that the lower costs associated with bank financing (draw-down provisions, lack of reserve fund etc.) provided the most attractive financing vehicle. As such, Sims coordinated a robust Bank Solicitation process, ultimately receiving six (6) competitive proposals to provide financing. As part of the financing request, the Banks were asked to evaluate the merits, and interest rate impact, of including LPK within the Landis Home Obligated Group, the only prior member of having been LHRC. With consideration of LPK within the Obligated Group having a minimal impact (0.15x DSCR), Orrstown Bank presented the most attractive financing offer, providing $25 million in draw-down capital financing to finance the project. Further enhancing the proposal was Orrstown’s willingness to provide an attractive natural fixed rate for the first 10 years of their 15-year commitment.
Processed in parallel and completed in sequence, Sims also provided bond underwriting services in connection with the refinancing of approximately $48 million of LHRC’s Series 2015B, 2015C and 2017A bank loans as well as providing approximately $5 million in additional capital for campus renovations and improvements. The Series 2021 Bonds were structured as parity obligations with LHRC’s existing Series 2015A Bonds as well as the LPK bank debt provided by Orrstown.
Both financings are secured by a Pledge of Gross Revenues, First Mortgage positions on both LHRC and LPK, and the Series 2021 Bonds are additionally secured by a Debt Service Reserve Fund. The LPK Bank Financing provides 15-years of committed funding, with an underlying 30-year amortization and a fixed-rate of 2.35% for 10 years. The Series 2021 Bonds were structured as 35 year bonds, bearing a 5-year premium redemption option and amortized to wrap around LHRC’s existing Series 2015A bonds, providing for overall level LHRC debt service.
The financing team worked seamlessly to be in a position to close the LPK bank financing prior to the expiration of the Bank’s natural fixed-rate commitment, followed in short order by the marketing and closing of the $53,385,000 Series 2021 Bonds. The bonds were well received in the market, receiving oversubscription of more than 5x, allowing Sims to lower interest rates during the marketing period to LHRC’s benefit.
Closing on August 18 and September 29, 2021 respectively, the $25 million Landis Place on King and the $53 million Landis Homes Retirement Community financings represent attractive financing vehicles for Landis, providing extremely competitive cost of financing and supportive of Landis’ growth plans over the medium and long-terms.
HJ Sims was honored to play a role in this important next chapter for Landis Communities and looks forward to assisting Landis again in the future.
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