A not-for-profit CCRC in Sandy Spring, Maryland that has been in business since 1962 was looking to expand and obtained financing from HJ Sims to fund the project. On a 62-acre campus, the community (called Friends House) features 32 independent living units and 75 low-income rental apartments, 82 comprehensive care beds and 21 assisted living units. However, ownership saw the need to replace the low-income apartments with a new 80-unit low-income housing building in a joint venture with Homes For America (HFA). But that’s not where the future changes stop. The CCRC will also renovate and expand the existing communal building, remove two vacant cottage units, and develop 14 new cottage units and about 33 units located in three buildings.

To finance the expansion (not including the concurrent HFA addition), HJ Sims closed a total of $30.175 in hybrid bond financings with a blended arbitrage yield of approximately 4.63%. The package consists of a $13.2 million loan placed with a commercial bank and a $16.975 million fixed-rate bond issuance, $10.2 million of which will be repaid within three years with proceeds from the initial entrance fees and the remaining $3 million to amortize completely thereafter over eight years. In the end, the borrower received both variable and fixed-rate financing with the cash flow flexibility of the longer-term bonds.