Sims Leads Largest Refinancing for a Single Site Life Plan Community
“The Sims team led a near seamless process for NewBridge’s $236.3 million public bond issuance. Sims’ deep knowledge of the tax exempt market and CCRC business model enabled Hebrew SeniorLife to obtain a favorable credit rating for NewBridge on a non-recourse basis. They also did an excellent job as the book-runner, staging the co-manager to complement its own investor base to achieve a significant over-subscription and lower cost of capital for NewBridge. Sims’ quality of execution exceeded our expectations.“
– James Hart, Chief Financial Officer, Hebrew SeniorLife
NewBridge on the Charles is a Life Plan Community developed in 2007 with the proceeds of a $457 million tax exempt bond issue underwritten by Sims, the largest issue of its kind. NewBridge is part of Hebrew Senior Life (”HSL”), one of the largest not-for-profit providers of health care and related services in Massachusetts with nine campuses and communities in the Boston area. Since 2007 HSL has had an affiliation with Harvard Medical School and is the only affiliate of the medical school focused on geriatric care.
NewBridge consists of 256 independent living apartments, villas and cottages along with 91 assisted living suites and a 268 health care facility. As part of the development of NewBridge, HSL moved the license for 220 chronic care beds from its existing campus in the Roslindale section of Boston to NewBridge. In addition to the chronic care beds, the health center has 48 short term post-acute rehabilitation beds.
Despite opening during the depths of the recession in 2009, NewBridge reached 96% independent living occupancy 25 months after opening.
Sims is privileged to have partnered with HSL for 25 years, not only financing NewBridge but a sister Life Plan Community, Orchard Cove, in nearby Canton, MA.
Long term capital stability was a very important objective for NewBridge at this stage of its life. The existing debt was held by a consortium of 10 commercial banks with a maturity in 2019, so there was inherent refinancing risk as well as future interest rate uncertainty. Achieving the lowest possible debt service was critical to NewBridge.
Sims worked with management in achieving an initial credit rating of BB+ (Stable) from Fitch. This rating, along with HSL’s commitment to NewBridge in agreeing to contribute $6 million toward the debt service reserve fund plus the ability to issue bonds with a 40-year maturity, lowered the annual debt service substantially,
In December 2017, there was considerable uncertainty in the tax exempt bond market resulting from the various tax reform proposals swirling around Capitol Hill. With the likelihood of a prohibition on advance refundings in the final legislation, Sims inserted a 5-year call provision in the bond structure to provide maximum future flexibility to NewBridge.
Despite distribution restrictions (such as a $100,000 minimum purchase) by the issuer for below investment grade rated bonds, over $16 million in bonds were sold to individual investors. In addition to individual investors, Sims sold bonds to 40 different institutions. Sims’ distribution strength provided interest rates lower than initial assumptions.
On December 19, 2017 Sims closed on a $236.3 million tax exempt bond issue for NewBridge. It was one of the largest bond issues in 2017 and the largest refinancing for a single site community ever completed. Interest rates ranged from 1.85% (1 Year maturity) to 4.125% (40 year maturity).