The Preserve

Sims Finances Start-Up Rental Community in Fort Myers

Partnered Right®

The Preserve Project (the “Project”) is a new assisted living, memory care and skilled nursing community that will be located in Fort Myers, Florida. The community is owned by VOA Lee County Health Care Facility, Inc., a Florida nonprofit corporation (“VOA Lee County”) which is an affiliate of Volunteers of America National Services, a Minnesota 501(c)(3) headquartered in Eden Prairie, Minnesota. VOA National Services does not itself own or operate facilities or properties. It is engaged primarily in the support, coordination, financial management, quality assurance and strategic planning for its 14 subordinate affiliates across the Midwest and Florida.

Upon completion, The Preserve will consist of 21 assisted living units, 17 memory care assisted living units and a 75 bed skilled nursing facility. The Project is located near pharmacies, grocery stores, churches, banks, restaurants and health care facilities.

Sims was selected by VOA Lee County as their financing partner because of Sims’ experience with local authorities and regulations, and because of its financing team members’ local knowledge and longtime experience with both start-up and rental projects in the Florida market.

Structured Right®

As is common with start-up projects, total borrowing capacity for The Preserve was constrained by projected cash flows. Sims worked with VOA Lee County to strengthen project cash flows by scaling back the original project plan to remove the planned independent living units which are now planned as a potential Phase II of the Project. This new unit structure helped to strengthen cash flow projections in the early years of operations and bolstered the projected debt service coverage and days cash on hand ratios.

HJ Sims worked with VOA Lee County to evaluate long term financing options for the Project. Tax-exempt long term fixed rate bonds would allow VOA Lee County to lock in a low fixed rate for 35 years without regard to loan to value constraints or future refinancing risks. Taxable bonds were necessary to fund working capital as well as issuance costs over the allowed amount in tax-exempt financings.

Executed Right®

After evaluating issuer options in the state of Florida, the borrower decided to move forward with Lee County Health Industrial Development Authority. Although this issuer required that all bonds be distributed to qualified institutional buyers (QIBS) only, it was determined that they were still the best partner for the Preserve. Furthermore, to provide additional credit support desired by the market, VOA Lee County entered into an unfunded liquidity support agreement for the project.

The Series 2017 bonds were sold to qualified institutional buyers and purchased by 13 institutional investors. Sims structured the tax-exempt bond piece with four maturities ranging from ten to thirty-five years to best take advantage of investor desires and market conditions.

Financed Right®

In December 2017, Sims closed on the $51,050,000 bond issue, comprised of tax- exempt and taxable bonds issued through the Lee Country Industrial Development Authority. Sims’ underwriting team was able to take advantage of low interest rates in the market and achieved an average coupon of 5.75% on the longest maturity of 35 years for the tax-exempt bonds.

With Sims’ leadership and the collaborative work of Preserve management team, and the full financing working group, the Preserve successfully completed the financing and realized its goals. These included: continued expansion into the Florida market and providing covenant relief and maintaining sufficient operating, financial and strategic flexibility to implement the future Phase II expansion.

For more information, please contact:

Aaron Rulnick

(301) 424-9135

Testimonials may not be representative of the experience of other clients. Past performance is no guarantee of future results