Financing Solutions for Acquisitions and New Developmentservices.housingonline.com/nhra_images/Gall...
Transcript of Financing Solutions for Acquisitions and New Developmentservices.housingonline.com/nhra_images/Gall...
Financing Solutions for Acquisitions and New Development
Bridge Loans and Subordinate Debt Conventional Financing and Preferred Equity
Case Studies on Utilizing Tax-exempt Bonds on a Senior and Subordinate Basis
Presented by: Robert D. Gall, Senior Vice Present, HJ Sims
SUBORDINATE DEBT IN CONJUNCTION WITH BRIDGE/FHA
Case Study:
HBS Assets, LLC Project • Acquisition of two existing nursing homes in Central Florida
– Baya Pointe Nursing and Rehabilitation, 60 bed skilled nursing facility in Lake City, FL – Osprey Pointe Nursing Center, 90 bed nursing facility in Bushnell, FL
Financing • HBS already arranged bridge-to-HUD first mortgage financing and had investors interested in
providing a third lien debt piece. • Sims worked with both the senior lender and the third lien lender to create a structure that
satisfied all lender requirements while protecting Sims’ security interest. • Total financing of $22,340,000, consisting of the following:
– $15,200,000 – Bridge Loan from Commercial Bank with FHA Loan takeout in 12 months – $3,390,000 –Subordinate Loan structured by HJ Sims – $3,750,000 – Equity Investment from Borrower and outside investors
Financing Highlight: During a time of disruption in the debt markets, Sims able to raise $3.4 million
from its retail investors and close in less than 45 days. Raising the money in such a short time period was essential as the buyer had a hard deadline. Sims was able to structure the investment and complete its due diligence on this expedited basis because of its experienced banking staff and in-house attorneys.
HBS Financing Structure
CONVENTIONAL FINANCING WITH PREFERRED EQUITY
Case Study:
Courtyard Fountains
Courtyard Fountains Project • Acquisition of existing senior housing community in Gresham , OR
– Joint-Venture partnership led by The Fountains Group (TFG) – Courtyard Fountains consisted of 208 Independent Living Units and 44 Assisted Living
Units
Financing • Senior Debt financing was being providing by Freddie Mac • JV was 90/10 partnership between large Institutional Investor and TFG
• Total financing of $42,440,000, consisting of the following:
– $25,000,000 – Freddie Mac First Mortgage Loan – $15,510,000 – 90% equity contribution from Institutional Investor – $1,930,000 – 10% equity contribution from TFG/Sims partnership in
Financing Highlight: HJ Sims worked with TFG to structure a preferred equity investment that
utilized Sims’ creativity, flexibility and industry expertise. Preferred Equity was sold to HJ Sims high net-worth retail investor base. Financing was able to close in a short time frame and worked within the requirements of a Freddie Mac loan for acquisitons.
Courtyard Fountains Structure
TAX-EXEMPT BONDS FOR INDEPENDENT APARTMENTS AS PART OF RENTAL CCRC
Case Study:
Rivers of Grosse Pointe
Artist Rendering of The Rivers of Grosse Pointe
Rivers of Grosse Pointe Project • New Development Rental CCRC located in Grosse Pointe Woods, Michigan
– 77 Independent Living Apartments; 80 Assisted Living units; and 86 Skilled Nursing Beds • Project also had 40 independent living cottages under a condo structure outside of CCRC
financing. • Owned and operator by an organization that operated two skilled nursing facilities in the
Detroit Metro Area.
Financing • Utilized 20%/50% set aside for tax-exempt status under section 142(d) for IL only • Total financing of $36,570,000 consisting of the following:
– $17,230,000 - Tax-Exempt Series 2013A - First Mortgage Bonds – $10,000,000 – Taxable Series 2013B – First Mortgage Bonds – $9,250,000 – Equity Contribution
Financing Highlight: HJ Sims was able to find a successful financing solution despite three
major challenges with the financing from when POS was mailed in June 2013 which were: 1) Detroit filing for Bankruptcy in July 2018; 2) Fed Reserve Chairman making Fed Tapering
Comments which started 6 months of bond sell offs; and 3) Only IL designated as set aside thus creating $10MM of taxable bonds to sell.
Construction Progress at Closing
Rivers at Grosse Pointe at Closing of Financing
TAX-EXEMPT BONDS ON A SENIOR AND SUBORDINATE BASIS
Case Study:
Springs at South Biscayne Project • New Development Assisted Living/Memory Care Community
– 95 Assisted Living units – 38 Memory Care units
• Located on site of the Church of South Biscayne in North Port, FL • Approximately 107,000 square feet
Financing • Utilized 20%/50% set aside for tax-exempt status under section 142(d) • Total financing of $24,500,000, consisting of the following:
– $21,800,000 - Tax-Exempt Series 2014A - First Mortgage Draw Down Bonds – $2,700,000 – Tax-Exempt Series 2014B – Subordinate Mortgage Bonds
Financing Highlight: The draw-down feature of the first mortgage bonds eliminated over $1.5
million of funded interest needed under a traditional fixed rate structure. In addition, the subordinate bonds enabled the project to reach certain credit metrics, helping to attract an institution to purchase the senior bonds on a draw down basis, limiting the need for the borrower to raise additional equity.
Ground Breaking of Springs
Ground Breaking of Springs