Omega Communities

Sims Provides Draw-Down Bonds and Preferred Equity


HJ Sims is pleased to announce the closing of $14,000,000 of Series 2015 Tax-Exempt Senior Bonds and $3,650,000 of Series 2015 Taxable Subordinated Bonds for Omega Communities to fund the acquisition and rehabilitation of a 105-unit assisted living community in Hoover, Alabama. As part of the renovation, the Borrower will reduce the number of Assisted Living Units to 86 units and convert 21 of the existing Assisted Living Units to specialty care assisted living facility or ‘SCALF’ units for residents with dementia and other memory affecting disorders. In addition to the changes in unit configuration, proceeds from the financing will be used to fund major renovations including (i) a lobby expansion; (ii) interior courtyard and crosswalk construction; (iii) exterior siding and repairs to the building; (iv) interior renovations including new flooring, painting and ceiling and dry-wall repairs; and (v) upgrades and improvements to paint, flooring, cabinets, vanities and HVAC in individual units. River Highlands marks the third senior living community owned by Omega Communities, a for-profit company based in Birmingham, Alabama. Omega Communities specializes in the development of faith-based senior living communities in affinity relationships with well-established sponsoring churches. Omega Communities developed and is the majority owner of The Springs of South Biscayne located in Sarasota, Florida and The Fountains of Hope located in North Port, Florida, both of which were financed by HJ Sims.


At the time of the acquisition, the project was occupied by only 20 residents. The acquisition plan included approximately $4.65 million in major renovations and improvements to make the community more attractive to potential residents and increase occupancy. Given the low occupancy, the ability to service debt is largely dependent on future occupancy growth, limiting the debt capacity for senior debt and increasing the need for equity investment in the acquisition. Lastly, financing for the project needed to be closed prior to expiration of a purchase option on the real estate in order to avoid losing the ability to acquire the community.


HJ Sims was able to utilize an institutional investor relationship to structure up to $14 million of tax-exempt draw down bonds. By allowing the borrower to draw funds as needed during construction, as opposed to paying interest on the full par amount of the bond issue at closing, the draw-down structure provided significant interest savings during construction when compared to traditional bond financing. In addition to underwriting the senior bonds, HJ Sims provided $3,650,000 of preferred equity in the form of subordinated taxable bonds sold to HJ Sims’ accredited retail investors. The preferred equity investment from Sims provided the necessary funds to fill the gap in the capital stack between the senior debt and Omega’s equity investment, and also helped the project meet the timing limitations of the purchase option on the real estate by eliminating the need to source additional equity.

For further information, please contact Jeffrey Sands.

(203) 418-9002

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