HJ Sims recently helped a CCRC in Ponte Vedra Beach, Florida (Jacksonville MSA) refinance its existing bond debt, generating significant savings for the well operating property. Developed in the mid-1980s, this community features 227 independent living units, 38 private assisted living units and 60 skilled nursing beds. Occupancy has historically been high and consistently over 95% for the independent living units, which recently received a renovation. The community’s Series 2007 bonds were not eligible for an advance refunding, because they had repaid the 1993 bonds that were used to advance refund the original 1987 issuance. However, HJ Sims worked with the community’s commercial bank partner to execute a forward starting interest rate swap in May 2016, which went into effect in November 2016. As a result, the CCRC received a 2.76% interest rate for 10 years, versus the 5% rate on its 2007 bonds, saving a net present value of $2 million. HJ Sims also reduced the community’s annual debt service by approximately $880,000 per year over the next decade, and saved an additional $312,000 from the forward-starting swap. Those savings allow the community to fund up to $1.2 million in capital improvements. The forward-starting swap included a seven-year cancellation clause, providing the community the option to refinance the 2014 and 2016 bonds when the mandatory tender for the 2014 bonds comes in 2024.

Sims didn’t stop there this month. In March, Meridian Capital Group announced it had provided a $93 million acquisition loan to an undisclosed buyer for the purchase of a 900-bed, seven-facility skilled nursing portfolio located in the Northeast. Now we’ve learned that HJ Sims arranged $18 million in subordinate mezzanine debt to help fund the transaction. In addition to underwriting the financing to account for future operational improvements by the new owner, Sims had to arrange terms that are flexible enough for a potential HUD refinance in the future. Combining the senior and subordinate debt, plus some equity from the buyer, we estimate the purchase price to be around $125,000 per bed, or just around the 2016 average of $124,200 per bed for skilled nursing transactions in the Northeast, according to our Senior Care Acquisition Report.