Sims Provides Bridge Financing for Skilled Nursing Facility in the Southeast
Partnered Right®
Based in the Southeast, the Borrower is a best-in-class regional healthcare owner and operator, with 15+ skilled nursing facilities in multiple states in the Southeast with the capacity to serve nearly 3,000 residents. Sims and a Bank Partner (the “Bank Partner” and collectively with Sims, the “Lenders”), previously partnered with the Borrower providing a uni-tranche first mortgage loan (the “A/B Loan”) to finance the acquisition of a skilled nursing portfolio in 2022.
Structured Right®
HJ Sims (“Sims”) was approached by the Borrower to provide debt financing for the acquisition of a skilled nursing facility (“the Community”) in an exurban area in the Southeast. The Borrower has a strong regional presence in the area and has operated the Community via a triple-net lease since 2020. As a result of its presence in the area, the Borrower was able to leverage its market expertise and economies of scale to drive strong performance at the Community.
Sims and a Bank Partner proposed a high-leverage, A/B loan to fund the acquisition, matching the general structure and terms as the A/B loan the Lenders previously provided to the Borrower. The A/B Loan combined two tranches of debt into a single debt instrument (the “A/B Loan”) with the Bank Partner providing a portion of the A/B Loan (the “Tranche A”) on a priority basis and Sims providing a portion of the A/B Loan (the “Tranche B Funding”) on a subordinate basis. From the perspective of the Borrower, the loan functions as a single debt obligation under a single loan agreement and security package.
Executed Right®
HJ Sims funded the subordinate Tranche B of the first mortgage loan, which in combination with the Tranche A proceeds provided by its Bank Partner, funded the acquisition.
Through an affiliate of Herbert J. Sims Investments, LLC (“HJSI”), Sims sold securities through its Private Client Group to fund the loan. The loan was structured with a 30-month term and interest only payments over the first 18 months of the loan, with amortizing payments, thereafter, limiting debt service expense over the near-term. The Borrower expects the A/B Loan to be refinanced with HUD-insured financing during the initial term, but the loan also included an extension option. Furthermore, the A/B Loan carries a floating interest rate tied to the 30-day SOFR rate, opening the possibility of a lighter interest obligation if rates subside.
Financed Right®
The customized financing solution was structured to help the Borrower with both its short and long-term financing needs, enabling the Borrower to permanently acquire the real estate of a strategic asset it operated since 2020. Additionally, by replicating the structure from a prior transaction, the Lenders were able to move quickly, meeting a tight closing timeline needed to adhere to the Borrower’s agreement to acquire the Community.
HJ Sims excels in providing customized debt and equity capital for senior living providers utilizing a variety of direct financing solutions including equity, preferred equity, mezzanine debt, and high leverage first mortgage loans, tailored to meet the unique financing needs of valued partners.
The financing marks Sims’ second successful closing with the Borrower.
For more information, please contact:
Curtis King
512.519.5003
Brett Edwards
512.519.5001