Financing Solutions for Acquisitions and New Development

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Leonard Snow
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1 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

2 Case Study: SUBORDINATE DEBT IN CONJUNCTION WITH BRIDGE/FHA

3 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.

4 HBS Financing Structure

5 Case Study: CONVENTIONAL FINANCING WITH PREFERRED EQUITY

6 Courtyard Fountains

7 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.

8 Courtyard Fountains Structure

9 Case Study: TAX-EXEMPT BONDS FOR INDEPENDENT APARTMENTS AS PART OF RENTAL CCRC

10 Rivers of Grosse Pointe Artist Rendering of The Rivers of Grosse Pointe

11 Project Rivers of Grosse Pointe 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.

12 Construction Progress at Closing Rivers at Grosse Pointe at Closing of Financing

13 Case Study: TAX-EXEMPT BONDS ON A SENIOR AND SUBORDINATE BASIS

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

14 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.

15 Ground Breaking of Springs

16 Ground Breaking of Springs

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