Sims Finances Start-Up Rental Community
“Experience, knowledge and a talented team make for an impressive HJ Sims corporate organization. However, without the driving force of tenacity of the Sims team, these admirable traits effectively become quite academic.
The ability to get a deal to the finish line, in spite of uninitiated and uncontrollable circumstances, is the true test of an investment banker. HJ Sims meets this test.
Our relationship with HJ Sims has been developed over a number of years. Having successfully closed multiple deals together, they have become a respected advisor and provider of investment capital.“
– Charles C. “Buddy” Smith, Jr, President, Tuscan Gardens
Partnered Right
Tuscan Gardens of Palm Coast is a new rental assisted living and memory care community that will be located on 16 acres in Palm Coast, Florida. Upon completion, it will consist of 86 assisted living units (comprised of 110 licensed beds) and 44 memory care units (comprised of 56 licensed beds) in three buildings of 152,000 square feet. The community is owned by affiliates of the Tuscan Gardens Group, a developer and owner of senior living communities. This is the second new development community by Tuscan Gardens.
The community is located in Palm Coast, a city of 81,000 and 30 miles north of Daytona Beach. The site is adjacent to the Grand Haven master planned community, which is a 1,400 acre community of approximately 1,700 homes.
Structured Right
Tuscan Gardens was undergoing market and site selection for a new development project. The Grand Haven ownership group had been under contracts with other senior living developers to build a retirement community that would complement its master planned community, provide a senior living option to meet the needs of its existing and prospective homeowners and serve the overall Palm Coast market. Tuscan Gardens conducted a preliminary market study to determine the demand and need for a new assisted living and memory care community in Palm Coast and was able to overcome previous development obstacles.
Another challenge to the development timeline was that the final construction numbers would not be available until late October 2016, right before the November presidential election.
Executed Right
The 2016 presidential election caused a slight interruption to the high yield bond market and the type of investors who purchase start-up rental senior living communities. Sims worked with Tuscan Gardens to strengthen the bond financing, including an additional equity contribution. Additionally, a new series of junior subordinate bonds was structured in a manner that improved the financial ratios of the senior bonds and increased the value of Phase II land by removing the land use restriction requirements from any future units developed on the property.
Tuscan Gardens also provided some additional credit support in the event of any delays in construction or the fill-up of the community upon opening. Tuscan Gardens also used part of its planned equity contribution to purchase the land in January 2017 and allow for site work to commence early in advance of the bonds being sold.
Financed Right®
Sims closed on the $43,775,000 million bond issues that featured four series of bonds. The senior bonds consisted of $39,550,000 of tax-exempt and taxable bonds that provided for a loan of approximately 78% loan to cost. Sims also structured $2,725,000 of tax-exempt subordinate bonds that were sold to accredited investors and an institution. The overall blended yield on the bond issue was approximately 7.42%. Approximately $11 million was sold to Sims’ accredited investor base and the balance to 6 institutional investors.
For more information on how Tuscan Gardens of Palm Coast was Financed Right® by HJ Sims, please contact Kerry Moynihan at 407.313.1702 | [email protected].