HJ Sims showed its range of services in recapitalizing two skilled nursing facilities in Florida on behalf of a private healthcare real estate investment firm, Next Healthcare Group (NHG). Sims’ involvement with the facilities goes back to 2013, when it provided a $3.4 million HUD Plus™ subordinate loan to a related company of NHG, HBS Assets, to finance the acquisition of the two facilities located in Lake City and Bushnell, Florida.
Built in the 1990s, which was relatively new for other northern Florida SNFs, the facilities were well occupied (at 92%) at the time of the sale with a high 40% Medicare census and 17% operating margin. HBS Assets had paid $20.86 million, or $139,100 per bed, with a 13.2% cap rate. They had also brought in Consulate Health Care to operate the facilities, which have continued to produce strong census and margins.
In 2015, HJ Sims refinanced the existing senior bridge loan and a portion of the subordinate HUD Plus™ loan with a HUD loan. Two years later, NHG wanted to recapitalize the facilities and modify the outstanding balance of the subordinate loan, all with an eye to a potential refinance through HUD within six to 12 months. To complete the transaction, HJ Sims acquired and modified the existing subordinate loan and provided a new mezzanine loan that satisfies NHG’s capital needs to pursue other investment opportunities. The new loan will be able to be refinanced through HUD at a later date and was structured with graduating amortization schedules.