HJ Sims secured more than $100 million in tax-exempt bond debt for a brand-new independent living community adjacent to Gurwin Healthcare System’s skilled nursing facility and assisted living community in Commack, New York. When completed, the new IL building will transform the whole campus to a full-fledged CCRC, the fourth on Long Island.
Gurwin has been providing health care services since 1988 and has now grown to include a 460-bed skilled nursing facility and a 201-bed assisted living community, plus a host of other services like memory care, palliative and hospice care, respiratory care, on-site dialysis and infusion therapy and two home health care programs. If that wasn’t enough, they are now adding a 129-unit independent living community to be called Fountaingate Gardens. Those 129 apartments are just the start too. Gurwin hired Eventus Strategic Partners and Perkins Eastman to help develop, design and build the community.
Gurwin Jewish Healthcare Foundation initially acquired land adjacent to the assisted living community to build the independent living, donating $4 million to cover early expenses and loaning nearly $16 million for pre-development capital. To support the approximate $113.8 million development costs, the Foundation has committed $25.5 million, which should be an assurance to bond investors as the IL units are so far only 55% pre-sold. The Foundation agreed to an Entrance Fee Guaranty Agreement, whereby it would advance up to $2.85 million, equal the entrance fees on six independent living units, in the event occupancy did not meet expectations upon opening. It also committed $10 million in the form of a Liquidity Support Agreement.
Turning to the bond issue, HJ Sims secured $102.115 million in tax-exempt bonds that were divided into two short-term entrance fee principal redemption bond series and a long-term bond series. The Series 2021C bonds totaling $31 million will be repaid when occupancy reaches 48%. The Series 2021B bonds totaling $32.5 million will be repaid when occupancy reaches 86%, expected to occur in 2023. Finally, the $28.615 million of Series 2021A bonds have a final maturity in 2056.
Sims sold $10.5 million of the issue to its Private Wealth Management clients, and the remainder was purchased by 28 institutional firms. The Series C bonds carry a yield of 3.125%, the Series B bonds have a yield of 4.125% and the yield on the Series A bonds maturing in 2056 is 5.375%.
