Financing the Development of a New Independent Living Community
Sims was approached by an affiliate of Sante Partners (“Sante”) to provide financing in connection with the development of a 129 unit independent living community in Glendale, Arizona. Once complete, the community will be leased by and operated by the largest private owner and operator of independent living communities in the U.S, Holiday Retirement. Sims successfully provided a mezzanine loan and preferred equity investment totaling $5.08 million to Sante to fund the development of the community.
There were several challenges associated with this financing:
- The debt needed to be structured in a way that met the requirements of the senior lenders and High Volatility Commercial Real Estate Regulations while also providing sufficient returns to all investors.
- The terms of Sims’ financing had to be flexible enough to allow for current and future capital needs of the client during the development period through certificate of occupancy.
A new entity, Sante Funding I, LLC (the “Sims Issuer”), was formed to issue taxable bonds. The bonds were successfully sold to Sims’ high net worth accredited investors. The proceeds from the bonds were used by the Sims Issuer to fund the subordinate debt and preferred equity to Sante. This approach allows Sims’ high net worth clients to invest in selected transactions but leaves the asset management and key decisions in the hands of Sims and its partner.
Sims was able to underwrite and then implement a subordinate debt structure that met the needs of Sante as well as the Senior Lender in a timely fashion. Sims’ ability to be flexible resulted in the financing of Sante’s sixth development and ultimately the growth of its portfolio.
A creative financing solution for strategic growth is an example of Sims using its extensive investor base to provide attractive financing to senior housing providers. Sims excels in filling the niches that allow an owner or developer to complete a transaction by providing custom financing such as mezzanine debt or preferred equity.
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