Working on behalf of a large CCRC in northeast Philadelphia, HJ Sims helped arrange a bank financing through the community’s existing banking partner. Philadelphia Protestant Home (PPH) currently consists of 266 independent living units, 175 personal care units and a 126-bed skilled nursing facility. Ownership had been funding capital improvements from general fund revenues, but in order to manage its cash flow, it chose to finance $6.5 million of upcoming capex projects.
So HJ Sims worked with Citizens Bank, the community’s existing banking partner, to secure a $6.5 million loan with a 10-year, fully amortizing term and a five-year interest-only period that is followed by monthly principal amortization. The debt was also structured with a five-year PPH-owned par call provision and was issued on a tax-exempt basis through the Philadelphia Authority for Industrial Development.
The transaction allowed PPH to keep its debt service at a manageable level, with HJ Sims negotiating a modified debt service coverage test to the benefit of the community. The financing was structured as parity debt with PPH’s outstanding Series 2015 debt, which matures in seven years. PPH was able to secure a synthetic fixed interest rate on the debt, with HJ Sims advising on a swap transaction that also bears a PPH-owned par termination right in five years, which aligns with the Citizens Bank loan.
