Merrill Gardens and HJ Sims Partner Again
“I firmly believe that what constantly draws us back to HJ Sims is the confidence I have developed over the years and that we can rely on their advice and execution. They’ve earned that confidence through the integrity and the atmosphere created by their deep experience in our industry. Sims is a key financial partner for our team at Merrill.”
– William Pettit, Jr., President and Chief Operating Officer – R.D. Merrill Co.
As a result of its past relationship, Sims was approached by affiliates of Merrill Gardens, LLC (“Merrill Gardens”) to co-invest with other accredited investors in its recently formed investment fund RDM V, LLC (“RDM V” or the “Fund”). RDM V was formed to acquire, develop and operate new senior housing and multifamily properties which will be managed by Merrill Gardens and its affiliates. This is the third Merrill fund in which Sims has participated. Sims agreed to partner with Merrill Gardens and subscribed to $15 million (19%) interest in the Fund. RDM V currently has investments in 3 senior housing properties and 1 apartment property and has identified 4 other senior housing communities as potential investments. Sims successfully raised $9.375 million to meet the initial capital needs of the Fund.
There were a number of challenges associated with this financing:
- Initially raising only the amount of funds required by RDM V for its initial capital call, while having the confidence in committing to fund the full subscribed amount at a future date;
- Convincing investors to make an investment when not all of the properties in the Fund have been identified; and
- Explaining to investors the nature of a development fund and its delayed returns.
A new entity, Merrill Gardens V, LLC (the “Sims Issuer”), was formed to issue a series of taxable bonds to meet the funding needs of RDM V. The first series of bonds was successfully sold to Sims’ high net worth accredited investors. Future series of bonds will be sold to meet future capital needs of the Fund. Proceeds from the bonds, together with funds invested by Merrill Gardens’ key principals and private investors, were used to meet RDM V’s equity commitments.
Sims was able to underwrite and then implement a customized structure that met the capital needs of Merrill Gardens and its affiliates. Sims’ expertise and ability to be flexible resulted in another unique capital solution for a valued client while also meeting the financial objectives of Sims’ investors. Successfully tackling complicated transactions is an example of Sims using its extensive investor base to help senior housing providers finance new development. Sims excels in filling the niches that allow an owner or operator to complete a transaction by providing custom financing such as mezzanine debt or preferred equity
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