Phoebe Ministries (May 2022)

HJ Sims Successfully Completes $115 Million All Bank Tax-Exempt Financing for New Satellite Campus and Refinancing

“Jim Bodine and Siamac Afshar were both extremely valuable assets to our financing team. This most recent partnership with HJ Sims was on a multi phased financing that included both new money borrowing and a refinance of current debt.  Phase I was related to a new independent living construction project which included $56 million of new money and an $18 million refinancing.  Phase II was related to the refinancing of all remaining legacy debt from one existing banking partner to another current partner. The HJ Sims team was an integral part of the bank solicitation and selection process which would have been significantly more difficult without their expertise.  Their review and organization of all bank proposals into a comparable format simplified the selection process tremendously.  Additionally, due to the rising rate environment and construction timeline, it was essential to complete the financing as quickly as possible.  We were able to accomplish this through the dedication of both Jim and Siamac.  Overall working with the HJ Sims team was a great experience and look forward to working with them again.”

 — Thomas L. Baer, CPA, Chief Financial Officer, Phoebe Ministries

Partnered Right®

Phoebe Ministries (“Phoebe”) is a not-for-profit, multi-facility organization specializing in healthcare, housing, and support services for older adults. Founded in 1903 and affiliated with the United Church of Christ, Phoebe offers a full continuum of care to serve the diverse needs of older adults – ranging from residential living options (independent and assisted) and services including long-term care, short-term rehabilitation, geriatric care management, specialized programs for persons with cognitive diseases such as Alzheimer’s and respite care. Located in seven Pennsylvania counties and serving approximately 15,000 seniors annually, Phoebe currently features four continuing care retirement communities, eight affordable housing facilities, home and community-based services, and three pharmacies serving Phoebe communities as well as unaffiliated communities. The Phoebe’s Ministries Obligated Group is comprised of:

i) Phoebe-Devitt Homes (the “Parent”), ii) three of four CCRCs (Phoebe Allentown, Phoebe Berks & Phoebe Richland, to include the Chestnut Ridge at Rodale community (“Chestnut Ridge” and the “Community”)), iii) and Phoebe Services.

Jim Bodine, representing HJ Sims and prior investment banks, has worked with Phoebe Ministries for more than 30 years on a variety of financings as well as supporting the organization’s pursuit of additional growth. This latest phase of work consisted of Phoebe’s engagement of HJ Sims in May 2018 to assist with evaluation of financing options for initial project costs, particularly land acquisition, for the new Chestnut Ridge at Rodale campus as well as capital needs at its Phoebe Berks campus – this culminated in a $18 million interim financing with Citizens Bank agented by HJ Sims. Following this financing, HJ Sims continued to support Phoebe’s project planning efforts focused particularly on securing financing along with evaluating the Phoebe Obligated Group’s outstanding debt for potential refinancing/modification.

Structured Right®

The Chestnut Ridge at Rodale project, is located on a 38-acre site, formerly the headquarters of the publishing company, Rodale, Inc., near the historic downtown of Emmaus, PA. The Community will be distinctly independent living focused (126 apartments) together with commons areas, but, will not offer healthcare related services on-site. Rather, healthcare services will be available at two other affiliates, Phoebe Allentown, 5 miles away and Phoebe Richland, 13 miles away or from other area health services providers.

Phoebe evaluated both bank and bond debt for project financing. Ultimately, it elected to finance entirely with bank financing – $90.2 million from a single source (Truist) and representing a new lending relationship. Truist offered Phoebe financing with a 15-year commitment period and multiple interest rate  options. These included a bank held fixed rate loan, which would be entirely drawn at closing, or a variable rate loan, all or a portion of which could be synthetically fixed via an interest rate swap, along with a draw-down feature for loan proceeds.  HJ Sims assisted Phoebe in the evaluation of the options.  At the time of the initial analysis, the bank-held fixed rate provided a lower interest rate, however as market conditions changed along with the continued benefit of a draw-down feature on the variable/synthetic financing option, it was determined that this latter option provided the lowest net cost of capital.  Further, the debt was also structured with the expectation of “deleveraging” following completion and fill-up, applying approximately $16 million of “first-generation” Entrance Fees. The interest rate during the construction period will be variable, and the “permanent” portion of the debt  fixed via a forward starting Fixed-Payor Swap. 

In parallel with the project financing, HJ Sims worked with Phoebe to evaluate its two largest components of outstanding debt and the merits of refinancing/modifying. Phoebe elected to work with its existing lender, Citizens Bank, to refinance its existing $24.5 million Series 2008 Loan (taking-out Key Bank, formerly First Niagara). In addition, Phoebe opted to renew its 2014 Loan with Citizens Bank in advance of an upcoming put date, with Citizens also assuming Key Bank’s portion of this financing, and securing committed financing through its final maturity of 2037.

Executed Right®

HJ Sims conducted a broad bank solicitation, canvassing seventeen (17) banks identified as having potential interest in providing financing to Phoebe.  This generated multiple attractive financing proposals with highly favorable terms: attractive interest rate pricing, low up-front fees, measured conditions precedent to financing and attractive covenants – this included two proposals to finance the entire project without a second bank, multiple proposals to lead a syndicate of banks along with several indications of interest to serve as a participant. The addition of Truist as a new lender for the Chestnut Ridge project combined with a continuing significant relationship with Citizens, allowed Phoebe to raise the required financing, together with having additional financing capacity for potential capital needs, secured on a parity basis and with common covenants.

HJ Sims also served as Swap Advisor, parallel tracking completion of financing conditions precedent, transaction documentation and bank credit approval.  Of note related to the swap, as interest rates were rapidly increasing in the weeks leading up to final closing, HJ Sims and Phoebe worked with Truist to lock-in the interest rate on the anticipated  permanent portion of the financing for Chestnut Ridge – this consisted of a forward starting fixed rate swap entered into several weeks in advance of closing, allowing Phoebe to secure a lower fixed rate than would have been realized had the rate been set on the actual  closing date. 

Financed Right®

In sum, with HJ Sims leadership and the collaboration of Truist and Citizens, Phoebe successfully secured $115 million in combined bank financing, for both new capital and refinancing, with a blended all-in rate of 3.15% and 15 year credit commitment including, for the refinancing, achieving committed funding through maturity. Of additional note was completion of financing and refinancing on an expedited schedule in late April and early May, respectively amidst rapidly rising interest rates. This provided two important financial benefits: 1) locking-in still attractive fixed interest rates, particularly for the Chestnut Ridge at Rodale project financing and 2) commencing project construction on a timely basis to avoid further increases in construction cost as well as increase the prospects for achieving projection completion and opening as projected.

For more information, please contact:

Jim Bodine


Siamac Afshar


Testimonials may not be representative of the experience of other clients. Past performance is no guarantee of future results