HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the successful recapitalization of a skilled nursing portfolio in Florida. Sims successfully sold $7.4 million of subordinate taxable bonds through its private client group to high-net-worth accredited investors, structuring a subordinate financing to meet the capital needs of Next Healthcare Group (NHG), a privately held healthcare real estate investment firm specializing in the acquisition and management of high-quality, skilled nursing facilities. The modification of an existing loan provided NHG with debt service savings while maintaining NHG’s flexibility to retire the loan with a future HUD refinancing. New proceeds from the financing allowed NHG to recapture a portion of its equity interest in the portfolio, providing NHG with capital to pursue additional investment opportunities.
“We value the creativity and expertise that the Sims team provides. Sims employed an innovative financing solution that provided flexibility and savings, meeting our capital needs,” said Michael Zamir, Managing Partner, Next Healthcare Group.
In 2013, Sims partnered with a related company of NHG, HBS Assets, providing a Sims HUD PlusTM subordinate loan which, together with a senior bridge loan, was used to finance the acquisition of a portfolio of two nursing homes located in Florida. Upon acquisition, the portfolio was leased to Consulate Health Care (Consulate) based in Maitland, Florida and one of the nation’s leading providers of senior healthcare services, specializing in post-acute care. The portfolio has consistently demonstrated strong operating and financial performance since it was acquired in 2013. NHG completed a HUD insured refinancing in 2015, repaying the outstanding senior bridge loan and a portion of the Sims HUD PlusTMloan. The balance of theSims HUD PlusTMloan remained in place upon the HUD refinancing.
NHG approached Sims to evaluate a recapitalization of the to a) minimize debt service payments to improve cash flow received from lease payments and b) maximize leverage to access equity invested in the portfolio. As a second step to the recapitalization strategy, NHG intended to pursue additional HUD financing within six to 12 months, the proceeds of which would be used to repay a portion of the existing subordinate debt, presenting a challenge as any new subordinate debt would need to remain eligible for the potential HUD refinancing.
To effectuate the recapitalization, Sims acquired and modified its existing Sims HUD PlusTMloan and provided a new mezzanine loan (Sims Loans). This structure provided NHG with the flexibility to refinance the modified loan with additional HUD debt at a later date. The Sims Loans were structured with graduating amortization schedules, minimizing annual debt service payments for the borrower. Proceeds from the new mezzanine loan were used to recapitalize a portion of NHG’s equity interest in the portfolio,and fund an interest reserve and issuance expenses related to the financing.
ABOUT HJ SIMS: Founded in 1935 on Wall Street, HJ Sims is a privately held investment bank and wealth management firm with $2.2 billion of assets under management. HJ Sims is one of the country’s oldest underwriters of tax-exempt and taxable bonds, having raised $22 billion for projects throughout the US. The firm is headquartered in Fairfield, Connecticut, with investment banking, private client wealth management and trading nation-wide. Pershing LLC, a subsidiary of The Bank of New York Mellon Corporation, is custodian of all client assets. HJ Sims is not affiliated withNHG. www.hjsims.com/ourstory. Investments involve risk, including the possible fluctuation of principal. Member FINRA, SIPC. Follow us on Facebook andLinkedIn.