We wrote last month about the general health of the CCRC market and the numerous expansion projects either breaking ground or opening even during a pandemic. Another CCRC is expanding its services thanks to a large bond financing closed by the team at HJ Sims. Jefferson’s Ferry in Brookhaven, New York is a CCRC that offers independent living, assisted living, memory care, skilled nursing and short-term rehab services.
This summer, the 20-year-old community announced a 60-unit independent living expansion, plus plans for a new 20-unit memory care building. There will also be renovations of the existing assisted living and skilled nursing areas, a new health and wellness center and additional dining options. More than 70% of the required pre-construction deposits had already been collected by this August, so we imagine the community hit its target.
HJ Sims has a history with this community, having underwritten the initial construction bond financing in 1999, followed by a refinance in 2006. Now, Sims has closed an $88.975 bond series, structured as two series of tax-exempt debt. The long-term bonds feature a 35-year final maturity and a five-year call feature. The short-term Entrance Fee Principal Redemption Bonds are expected to be repaid within three years from entrance fees paid by the new independent living residents. Principal amortization on the long-term bonds was deferred until after the existing debt matures in 2036. The yield on the entrance fee bonds was 1.75%, while the long-term bonds have a yield of 3.75%.
HJ Sims wasn’t done. The firm also closed a forward delivery bond issue for Peconic Landing, a CCRC in Greenport, New York. Set on a 145-acre campus, including 2,700 feet of private beach on Long Island Sound, the community consists of 296 independent living apartments and cottages, 42 assisted living units and 60 skilled nursing beds. It opened in 2002 as the only New York CCRC organized under the equity model with residents belonging to a cooperative and able to share in the appreciated value of their IL units.
One year ago, Sims closed $22.325 million in forward delivery bonds that were sold at a set interest rate of 3.45% but would not be delivered/settled until the call date in November 2020. Interest rates may not have risen, but Peconic Landing had a series of high interest rate bonds outstanding (that tax law precluded a refunding of those bonds until the 2020 call date), so they got a deal. Proceeds of the bonds can now be used to redeem the outstanding 2010 bonds and fund capital improvements.