HJ Sims returned to a CCRC in Charlotte, North Carolina to arrange a refinancing solution for the campus. The transaction comes nearly two years after HJ Sims closed $12.95 million in tax-exempt Revenue Anticipation Bonds to cover pre-development and development costs for an expansion project. A year later, HJ Sims identified a refunding opportunity for the sponsor’s outstanding Series 2013 bonds. They utilized Cinderella Bonds, which would be taxable until the optional redemption date, after which the bonds would convert to tax-exempt.
Sims served as a placement agent and worked with the sponsor’s financial advisor, Pearl Creek Advisors, to conduct a bank solicitation to also refinance Series 2017B bank debt held by Truist Bank. Ultimately Truist was selected to provide the debt, with their commitment featuring attractive rates, a 12-year commitment period, covenants that largely conformed to the sponsor’s master trust indenture, and a SOFR-based loan. Plus, Sims and Pearl Creek Advisors worked with the campus’ swap advisor, KPM Financial, to structure three SOFR-based swaps and terminate the existing Series 2017B swap.
In the end, Truist closed on $28.685 million of Series 2021A bonds to defease the 2013 bonds and $15.34 million of Series 2021B bonds to refinance the bank debt. The Cinderella bonds should result in about $3.89 million in total savings, while the Series 2021B refinance extended the put date by six years, eliminated interest rate risk through the commitment, and lowered the all-in swap rate from 3.9215% to 2.587%. These moves improved the campus debt service coverage ratio by 0.14 basis points.
