HJ Sims Delivers $125 Million Forward Refinancing for Toby and Leon Cooperman Sinai Residences of Boca Raton
“Once again, HJ Sims provided outstanding professional guidance, and financial expertise, leading Sinai Residences through completion of a forward refunding of our Series 2014 Bonds. The bond refunding process was complex and subject to time constraints, and HJ Sims performed perfectly throughout the entire process. Sinai’s annual debt service was reduced by $4.5 million subsequent to the bond refunding, which was in line with HJ Sims projections.
The bond refunding was our fourth material bond transaction since Sinai’s inception, all with HJ Sims. Sims is, and has been, a major part of Sinai’s success. I look forward to the continuation of our outstanding relationship, and future funding opportunities, with HJ Sims.”
– Mel Lowell, Executive Director, Sinai Residences & Capital Projects, Jewish Federation of South Palm Beach County
Toby and Leon Cooperman Sinai Residences of Boca Raton is an existing life plan community, managed by Life Care Services, which consists of approximately 234 independent living units, 48 assisted living units, 24 memory-support units, 60 skilled nursing beds and related common amenities. Sinai Residences is located in Boca Raton, Florida in South Palm Beach County. Sinai Residences opened in January 2016 and achieved stabilized occupancy of its independent living units in just 9 months’ time, of its skilled nursing units in 11 months, of its assisted living units in 10 months and of its memory care units in 6 months. All entrance fee debt associated with the initial development of Sinai Residences was repaid nearly 2 years prior to the expected final repayment of such indebtedness. HJ Sims had previously partnered with Sinai Residences on four financings ranging from the seed capital issued to fund its initial pre-development expenses to the approximately $135 million Series 2020 Bond financing for its 111 independent living unit expansion.
As fund flows had recovered from the 2020 COVID-19 pandemic outflows and bond rates remained at historic lows, HJ Sims approached Sinai Residences with a plan to forward refinance the outstanding Series 2014 Bonds. The Series 2014 Bonds were issued for the initial development of Sinai Residences and as such had coupons ranging from 6.75% to 7.50% and were callable on June 1, 2022. As tax reform enacted through the Tax Cuts and Jobs Act of 2017 eliminated the ability to advance refund tax-exempt bonds on a tax-exempt basis, the Series 2014 Bonds could be refunded through a process called a forward delivery process whereby the refunding bonds are priced on one date and delivered at a later date. This process results in a higher yield to the borrower than a conventional bond financing would have yielded, but as a conventional bond financing was not possible at that time and rates were near historic lows and appeared likely to rise in 2022, the Sinai Residences team decided to proceed with the forward refinancing.
Sinai Residences also recognized it was in the midst of a large expansion that would be stabilizing in the near term. As such, they asked HJ Sims to structure the financing in such a way as to provide them with funded interest for the first two interest payments and with an interest only period of three years to provide them with near term additional cash flow savings to allow them to direct their cash resources towards offsetting increased community-wide staffing rates and replenishing their balance sheet.
On November 5, 2021, HJ Sims underwrote the $125,345,000 Palm Beach County Health Facilities Authority Revenue Refunding Bonds for the Toby & Leon Cooperman Sinai Residences of Boca Raton that would be delivered on March 3, 2022 for an ultimate redemption of the outstanding Series 2014 Bonds on June 1, 2022. The cost to Sinai Residences for the forward delivery was approximately 20 basis points; by contrast the 30-year MMD increased nearly 40 basis points between pricing and the forward delivery date while non-rated credit spreads for senior living communities also increased during the same period by an even larger margin. The 4.00% coupon 2026, 2031, 2036 and 2041 bonds had yields of 2.65%, 3.30%, 3.45%, and 3.60% while the final 2056 term bond was priced at 4.25% to yield 3.875%. HJ Sims also was able to secure a five-year call feature at a 103% premium declining to a par call after eight years. Prior to the refinancing, Sinai’s maximum annual debt service on the Series 2014 Bonds was $10.30 million. After the refinancing, Sinai’s maximum annual aggregate debt service on its $135 million 2020 expansion bonds and on the $125 million Series 2022 Bonds was $10.49 million, essentially equating to adding $135 million in expansion financing to its capital stack for a net increase of approximately $190,000 in annual debt service.
For more information, please contact: