Refinancing Led by HJ Sims Provides Stable Debt Service Platform Providing Flexibility for Future Growth Opportunities
“We were very pleased to work with Aaron Rulnick and the team at HJ Sims to help us with our campus refinance initiative. The team was very thorough, knowledgeable and extremely professional. They made the process simple, easy to understand, and helped us achieve an optimal outcome.”
–Jim Newbrough, Chief Executive Officer, Menorah Park
Partnered Right®
Menorah Park Center for Senior Living Bet Moshav Zekenim Hadati (“Menorah Park”) is a dually certified Medicare/Medicaid health care provider operating residential and outpatient health care services consisting of a 355 bed skilled nursing home facility, two licensed residential care facilities comprised of Stone Gardens (118 units) and Wiggins Place (145 units) a senior independent living facility known as R.H. Myers Apartments (193 units); three home health care offices in Northeast Ohio; outpatient rehabilitation services including physical, speech, occupational and aquatic therapy; a clinical model adult daycare service; an ambulance and medical transportation service; and other community services. HJ Sims was engaged by Menorah Park to provide a plan for a stable debt service platform upon which Menorah Park could evaluate future growth opportunities.
Structured Right®
Menorah Park’s had existing debt that included a short-term fixed rate loan, a longer-term fixed rate HUD loan, and two variable rate bank-held bonds. Due to the flattening of the yield curve, the gap between the short term variable rate debt and longer-term fixed rate bonds narrowed, and Menorah Park wanted to seize the opportunity to establish a long-term fixed rate debt service platform. Menorah Park also had planned ongoing infrastructure upgrades for its campus that it sought to finance with tax-exempt bond proceeds. HJ Sims worked within the IRS promulgated regulations for useful life of the facilities financed to extend the weighted average maturity of the indebtedness and provide level debt service over the life of the bonds. In addition, Menorah Park had attractive existing financial covenants that it wished to maintain through the refinancing, and it also sought to utilize an obligated group structure that would be non-recourse to its Foundation.
Executed Right®
To meet the foregoing strategic financing objectives of Menorah Park, HJ Sims recommended a fixed-rate, tax-exempt bond issue (the “Series 2018 Bonds”) utilizing a master trust indenture that preserved and improved upon existing covenants, did not encumber the Foundation, and included additional flexible covenants to facilitate future growth opportunities. The Menorah Park refinancing came during a rising interest rate environment and a bond market that was showing significant outflows from the bond funds. HJ Sims assisted Menorah Park in navigating through these adverse market conditions to a successful pricing.
Financed Right®
On November 8, 2018, Sims successfully priced the $32,290,000 issue. The bonds provided a level debt service structure that eliminated interest rate risk on the variable rate indebtedness and refinancing risk around bank put dates, providing Menorah Park with a stable platform upon which to pursue growth opportunities. Furthermore, the documentation for the bond issuance provided the financial covenant structure and obligated group structure Menorah Park sought to maintain while providing additional flexibility for the pursuit of future growth opportunities within certain parameters and without bondholder consent.
For more information on how Menorah Park was Financed Right® by HJ Sims, please contact:
Aaron Rulnick
(301) 424-9135
Melissa Messina
(203) 418-9015
Patrick Mallen
(203) 418-9009