Sims Advises Rolling Green Village on Strategic Pre-Development Capital
“The HJ Sims team listened to the needs of our Community and helped us secure a solid predevelopment deal. They worked efficiently with our working group to quickly approve tax-exempt financing within three weeks! We are grateful for our partnership with HJ Sims.”
– Ryan Toerner, Executive Director
Partnered Right®
Rolling Green Village (“RGV”) is a large, not-for-profit senior living community located in Greenville, South Carolina. The community is currently managed by Life Care Services (LCS) and is home to 496 independent living units, 30 assisted living apartments, 22 memory care apartments, and 74 skilled nursing rooms. The community recently expanded in 2018 when it added 60 new independent living apartments, 23 independent living cottages as well as new common spaces and amenities. The project was successful and prepared the organization for completing the remainder of its master plan.
The next phase of the master plan includes another substantial independent living expansion, as well as construction of a new assisted living building. During the project planning process, RGV and LCS Development brought in Tom Bowden and David Saustad of HJ Sims to provide board education on financing trends. Tom had assisted the community with the 2018 financing at a prior firm. The organization ultimately selected Tom and the HJ Sims team to assist with their current expansion financing.
Structured Right®
By mid-2024, RGV had started the pre-sales process and was moving forward with finalizing construction documents. To preserve the community’s balance sheet, RGV decided to fund these costs with debt. In the spring and early summer, Sims provided additional education on potential plans of finance to fund the predevelopment costs, including through the community’s existing lender that also funded its 2018 expansion project. In 2022 and 2023, the commercial bank market became constrained as the Federal Reserve increased interest rates. Many banks, including RGV’s existing lender, paused lending for new construction opportunities. Due to this pause there was some concern that the bank would be unable to provide the pre-development loan and RGV would need to seek funding from another lender.
Sims and RGV approached the existing bank with the request to fund $10.7 million in predevelopment costs, as well as capital improvements for the existing campus. After a few weeks of providing information to the bank on the expansion project, the lender agreed to submit a proposal for a two-year predevelopment loan. This proposal represented one of the first loans for new construction to a not-for-profit senior living organization since it had initially paused on deploying capital to the sector. The other terms of the loan were also competitive with the current lending market, with the lender matching the existing master trust indenture and waiving an appraisal requirement. The two-year maturity also provided cushion, as RGV expected to finance the expansion project in the fall of 2025.
With the predevelopment loan secured, Sims analyzed whether it made sense to borrow the loan on a tax-exempt or taxable basis. Given the short amount of time the loan would be outstanding (less than two years) and the up-front costs associated with going through the tax-exempt issuance process, it initially seemed unlikely that the tax-exempt option would generate a meaningful economic benefit. However, after estimating a cost of issuance budget with bond counsel and learning that the issuance process would only take a month, the analysis showed that using tax-exempt debt provided enough benefit to warrant going through the issuance process.
Executed Right®
With the structure selected, Sims quickly pulled together the working group to draft the necessary legal documents to close the financing. The working group was able to move quickly due to using the community’s existing lender and legal documents, which required very few updates. The key path was meeting the issuer’s schedule to approve the financing. Just three weeks after kicking off the financing, RGV secured issuer approval.
Financed Right®
On September 24, 2024, Rolling Green Village and its existing lender closed on the $10.7 million predevelopment financing. Over the next year, Rolling Green Village will continue to secure entitlements, expansion project presales, and a GMP contract to secure permanent financing.
Tom Bowden
804.613.3280
David Saustad
214.909.8588
For more information, please contact: