Reposition and refinance

HJ Sims recently helped Cross Keys Village, the ninth-largest single-site not-for-profit CCRC in the country, obtain two bank loans, totaling $42.5 million, in order to both refinance a bridge line of credit and fund an expansion of its campus. Founded in 1908, the CCRC currently features 444 independent living units (in apartments, cottages and country homes), 91 assisted living units and 270 skilled nursing beds. The sponsor, the Southern District of the Pennsylvania Church of the Bretheren, together with architectural firm SFCS, Greenbrier Development and Sims, decided on a campus expansion project, which would include expanding its health center facilities (particularly its skilled nursing), adding 32 new memory care beds and constructing 50 IL cottages (built in phases over three years). To start the project in 2014, the CCRC received a $10 million bridge line of credit from Sims.

In addition, there was approximately $32.7 million of outstanding LOC-backed variable rate 2007 demand bonds, with the letter of credit renewal set for November 2015, accompanied by a long-dated variable-to-fixed interest rate swap. So, Sims arranged for the community’s existing bank to directly refinance the 2007 debt, following the same principal maturity/amortization structure (which featured larger early principal repayments) and interest rate swap as the bonds. Then, to finance the expansion project and refund the bridge line of credit, Sims structured a separate $9.8 million loan provided by another bank, which will also provide up to $15 million for additional capital needs associated with the project. Sims was able to arrange low all-in cost financing, combining variable rate financing along with fixed rate financing, including retaining the existing swap on the bond refinance and adding a forward starting swap (two years forward plus a 10-year term) on the new permanent debt. Jim Bodine led the way for Sims on this transaction.

 

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