Searstone (March 2023)

HJ Sims Completes 3-Step Finance Plan for Searstone, Including Nearly Seventeen-Month Forward Refunding

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Partnered Right®

Samaritan Housing Foundation, Inc., dba “Searstone” is a life plan community located in Cary, NC that opened in 2013.  The Community currently consists of 131 independent living apartments, 38 independent living estate homes, 14 assisted living units, and 25 skilled nursing units.  HJ Sims provided the start-up financing for Searstone in 2012, along with three subsequent financings leading up to financing The Highview at Searstone expansion project (the “Expansion Project”), financed in 2021.

The Expansion Project will fulfill the original vision of Searstone as a larger campus that was downsized due to economic and market conditions following the Great Recession, approximately doubling the number of units at Searstone, with 152 independent living apartments, 29 assisted living units, including 14 specialized memory support units, and 24 skilled nursing units.  It will also provide new dining venues, a multi-purpose room with capacity for up to 350 people, several outdoor spaces, and renovations to the existing common areas. 

Structured Right®

The Expansion Project continues to experience strong demand for its independent living units.  At the original 2021 financing, approximately 80% of the units were reserved.  As of January 31, 2023, the project is 98% reserved, with initial opening approximately 11-12 months away.

The 2023A Bonds included a period between pricing and delivery of the bonds, which is typically a matter of weeks, of nearly 17 months, representing the longest forward period for a non-rated organization to date in the senior living sector.  In addition to the economic benefit for Searstone, the combined plan of finance provided an opportunity to efficiently structure all future debt service for the organization instead of a piecemeal approach that would cost more over time.

Executed Right®

Upon closing of the Series 2021 financing, HJ Sims was able to negotiate a number of changes to the existing bond documents to provide on-market terms with respect to covenant calculation measurement and other items given the size and scope of the Expansion Project.  With the delivery of the Series 2023A Bonds, additional changes that further cleaned up the existing documents sprung into effect.  In their totality, the changes will help in supporting the efforts of the Expansion Project in the near-term as well as provide flexibility for the future.

Financed Right®

The Series 2023A Bonds, which refunded the Series 2017 Bonds, priced on October 20, 2021, when 30-year MMD closed at 1.68%.  On March 3, 2023, the delivery date for the Series 2023A Bonds, 30-year MMD closed at 3.60%, an increase of 192 basis points, much greater than the 60-70 bps forward premium initially priced into the bonds.  At current rates, the refinancing would not have been an economically viable option for Searstone.

In addition to the substantial benefit that Searstone realized by pricing the bonds in a lower interest rate environment, the much higher rate environment at present is also benefitting Searstone via investment of the defeasance escrow into state and local government securities (SLGS).  Between delivery of the bonds and June 1, 2023, the earliest optional call date, the escrow will generate over $900,000 of investment earnings that was unanticipated at the time of the original financing.

For more information, please contact:

Aaron Rulnick


Tom Bowden


Nick Roberts


David Saustad


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