HJ Sims Assists United Church Homes Acquire Pre-Built Start-up Independent Living Campus
Partnered Right®
Founded in Upper Sandusky, Ohio in 1916, United Church Homes (“UCH”) owns and manages more than 70 Life Plan, healthcare and affordable housing communities in 14 states and two Native American nations. UCH provides affordable housing, independent living, assisted living, long-term care, rehabilitative care and memory care to thousands of older adults. The communities of United Church Homes are open to everyone, regardless of race, gender expression or sexual identity, color, religion, sex, national origin or disability. Each UCH community completes SAGECare training to better understand the unique needs and concerns of lesbian, gay, bisexual and transgender (LGBT) older adults.
HJ Sims was hired to assist UCH in connection with securing financing to acquire the Polaris Retirement Community from Polaris Retirement Living Properties, LP. A newly built independent senior living community for those 55 and older having 136 one- and two-bedroom apartments and located north of Columbus, OH.
Structured Right®
The Polaris Retirement Community was in the final stages of construction when UCH was invited to bid on acquiring the project. The acquisition was structured to have UCH take possession following the issuance of a Certificate of Occupancy. Since UCH would be the owner at the time the project was placed into service, we were able to access tax-exempt debt. Sims explored several types of financing, seeking up to a $33 million Tax-exempt Loan. UCH garnered strong interest in both traditional and non-traditional financing products. UCH ultimately electing to move forward with Northwest Bank as their Banking Partner for the project.
The facility is secured by a pledge of Gross Revenues and a Mortgage on the Polaris property, and no recourse to the UCH Obligated Group, outside of the $10 million in equity contributed to the acquisition. Among the highlights of the new facility are: i) competitive interest rate pricing along with up-front and ongoing fees, ii) expedited closing. The attractive terms and flexibility afforded by Northwest Bank were important to UCH as the sellers desired to close the sale before the end of Calendar Year 2020.
As final construction was in the final stages and ultimately delayed on the seller’s side, Sims worked with UCH and the financing team to monitor and update financing cash flows and relevant financing terms and covenants due to changes related to the delay in closing.
Executed Right®
Northwest provided a variable rate bank loan with committed funded for 5-years and underlying amortization of 25 years. Sims also served as Swap Advisor in connection with the financing, advising UCH through the process of synthetically fixing the interest rate via a fixed-payor swap with Northwest. Ultimately based on the acquisition price of $33 million, UCH financed approximately $27 million from Northwest.
The financing team worked expeditiously to be in a position to close by year-end, however, while the financing team was prepared, construction and inspections on the property delayed final closing of the transaction to Summer 2021. Sim continually monitored the interest rate and swaps market, to ensure the financing and acquisition remained an attractive project as time and market conditions changed.
Financed Right®
Closing on July 28, 2021, the $27 million financing represents an attractive financing vehicle for UCH. The debt is non-recourse to the Obligated Group – not requiring any guarantees or support from the Obligated Group, allowing the Obligated Group to maintain its bank capacity for it’s growth initiatives.
HJ Sims was honored to play a role in this important next chapter for UCH, representing our third transaction with UCH in as many years.
For more information, please contact:
Lynn Daly
312.505.5688
James Bodine
267.360.6245
Siamac Afshar
267.360.6250