HJ Sims Advises Poydras Home on Financing Expansion Project, Community Improvements and Refinancing
“Poydras Home Leadership was impressed with the responsiveness of our partners at HJ Sims in resolving any questions and concerns that happen when working with an active Board of Directors, during a building supply shortage, with an uncertain economic landscape, during a pandemic, and via Zoom. The entire process was much less stressful than our previous transactions, and we left the table knowing we got a great deal for the future of our mission at Poydras Home. At the end of the day, our duty to provide the best care for our Elders and to protect the assets of Poydras Home will be met with this expansion. We are truly grateful for the expertise of our Team at HJ Sims“
– Erin Kolb, CEO, Poydras Home
Poydras Home is an existing Continuing Care Retirement Community (the “Community”), on Magazine Street of New Orleans, Louisiana serving the city’s seniors. Poydras Home opened in 1857, and is located in the leafy Uptown neighborhood of New Orleans. The community currently consists of 10 independent living units, 22 assisted living units, 11 memory care units, and 64 private nursing care beds.
Recognizing the significant changes in care today’s seniors desire, particularly in light of the COVID-19 pandemic, Poydras Home will replace all 64 nursing units with a “small house” model and the addition of 14 new assisted living units across two three-story buildings. When planning began for the project, Poydras Home engaged HJ Sims to assist them in developing a plan of finance for the project. With the occurring in the shadow of the COVID-19 pandemic, HJ Sims helped Poydras Home navigate and plan for operations post-COVID-19.
The Green House Project plans to bring an innovative “Green Home” model of care to Poydras Home and become the first certified Green House home in the state of Louisiana. In a Green House home, the resident will be at the center of all decisions. These decisions will be made based on the needs, wants, and desires of the elders living in each home. This person-centered approach has proven to provide residents with individualized care and higher levels of satisfaction and compared to a traditional nursing home. The Green Homes will be housed in two new three-story buildings on our campus. In Building 1, there will be three nursing care households of 12 residents. In Building 2, there will be two nursing care households with 14 residents and one assisted living memory care household with 14 residents. Each home will offer private bedrooms with private baths, an open-concept kitchen, dining room, living room and den, and access to a private outdoor space overlooking spacious gardens.
As Poydras Home refined its development plans, HJ Sims evaluated plans of finance, and eventually structured two taxable loans with a commercial bank. In addition to securing financing for the new project, Poydras Home sought to refinance the organization’s outstanding loan to create debt service savings and improve covenant provisions.
HJ Sims coordinated with management and the Board of Poydras Home on a strategy that ultimately involved combining their two financing goals: funding their new project (the “Construction Loan”), and refinancing their existing loan (the “Refinancing Loan”). In the shadow of the COVID-19 pandemic, HJ Sims led the bank RFP process. The RFP process resulted in a strong demand among potential lenders, which ultimately enabled HJ Sims to select Hancock Whitney as the preferred commercial banking partner.
As the financing progressed, Poydras Home was notified that their planned construction contractor would be unable to complete the project. HJ Sims worked closely alongside the management and Board of Poydras Home, and the lending partner, to revise the plan of finance and secure a new construction partner.
On May 27, 2021, HJ Sims closed the two loans. On the construction loan, Sims used a forward-starting swap drawdown structure to provide significant savings as interest rates remain near historical lows. On the Refunding Loan, Poydras Home was able to eliminate significant swap liability and future balloon payment risk.
Poydras Home, HJ Sims, and Hancock Whitney closed the $23.34 million financing on May 27, 2021. The financing consisted of a $16.50 million taxable draw-down construction loan and a $6.84 million taxable refunding loan. Hancock Whitney was the commercial lending partner for both loans.
The Series Construction Loan was issued with a 25-year principal amortization and 10-year term including a 24 month capitalized interest period. The Refunding Loan was issued with a 25-year term that included a significant rate premium to break the existing swap and allows Poydras Home to better prepare for its financial future.
For more information, please contact: