HJ Sims worked on behalf of The Bethel Methodist Home, a not-for-profit CCRC in Valhalla, New York, to refinance the property’s existing acquisition bonds. Opening in 2002 and offering a continuum of services from independent living to skilled nursing, the property experienced financial difficulty during the Great Recession (few entrance fee CCRCs escaped that fate) and ultimately filed for bankruptcy protection in 2015. That process resulted in a 2016 sale which was funded by both tax-exempt and taxable bonds privately placed with a single bond holder and coming with a high interest rate.  

New management turned around the operations, with occupancy rising from 57% to 91% just before the pandemic hit, and they had invested $12 million in renovations over the years. So, ownership decided to lower its debt service costs and refinance the portion of debt that was set to mature in 2023, with an accompanying balloon payment if not restructured. Adding another complication, a non-call provision blocked refunding one portion of the debt until 2024. 

So, HJ Sims negotiated an early exit that required a tight timeline for closing. Nevertheless, Sims structured the new taxable bond series to mature in 10 years. Meanwhile, the tax-exempt series will not start to amortize until the taxable series is retired, and was extended 11 years beyond the prior maturity. In the end, $30.03 million of bonds were issued and purchased by Sims’ Private Wealth Management clients, with the taxable series carrying a yield of 6.125% and the tax-exempt series coming with an interest rate of 4.9%, or well below the prior 7.00% yield. This results in nearly $1.0 million of annual debt service savings.