Asbury Communities Partners Again with HJ Sims to Achieve Savings
FAIRFIELD, Conn., Aug. 4, 2021 /PRNewswire/ -- HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the successful closing of a June 2021 financing for $47,615,000 for Asbury Communities, Inc. (Asbury), which owns/operates life plan communities in PA, MD, and TN, HUD Section 202 senior housing, a foundation and a technology consulting firm. The facilities included in its PA and MD Obligated Groups are owned/operated by Asbury Atlantic, Inc., a wholly-owned subsidiary of Asbury.
Asbury's PA Obligated Group (PA Obligated Group) is comprised of two life plan communities – Bethany Village Retirement Center (Bethany) in Mechanicsburg, PA, and Springhill in Erie, PA. Bethany includes two campuses with 400 independent and 100 assisted living units, and a 69-bed skilled nursing center and amenities. Springhill has 158 independent living and 35 personal care units, and an 80-bed skilled nursing facility.
Sims served as underwriter for several Asbury transactions, including a $59.5 million financing in 2019 and a 2020 refinancing. The objectives were to maximize debt service savings while minimizing/eliminating renewal risk associated with traditional commercial bank financings. Sims recommended a hybrid finance plan with benefits of a traditional bank loan and a fixed rate bond issuance.
The refinancing of the Series 2012 Bonds consisted of a bank loan in the amount of $20,380,000 and tax-exempt fixed-rate bonds in the amount of $27,235,000. The bank loan utilized the Cinderella Bond structure, with initial issuance on a taxable basis until eligible for conversion to a tax-exempt rate in October 2021. The favorable cost of capital and the loan fully amortizing over a 12-year term eliminates need to refinance the debt. A forward starting interest rate swap was arranged, set to initiate upon conversion to a tax-exempt interest rate, resulting in a synthetically fixed rate for the bank loan.
A forward commitment for the fixed-rate bond portion refinanced the remainder of Series 2012 Bonds with principal amortization beginning following maturity of the bank loan. The structure leveraged a favorable interest rate to lock-in pricing. Asbury sought to maintain savings as rates continued to rise targeting at least 10% savings. The taxable loan will be refinanced by a tax-exempt bank loan and the tax-exempt bonds will be delivered October 4, 2021. The loan and Series 2021 Bonds maintained level debt service for the PA Obligated Group for the remaining life of the bonds, providing savings of 11.73%.
For the PA Obligated Group, the aggregate $47,615,000 Series 2021 Bonds are projected to generate $400,000+ of annual debt service savings through 2041 and net present value (NPV) savings of $5.5 million. Inclusion of the bank improved Asbury's savings relative to a fixed rate forward refunding structure for the full refinancing by providing approximately 20% of the total NPV savings, lowering cost of capital and interest expense while maintaining certainty of future debt service for the life of the bonds.
"Once again, Sims helped Asbury navigate through a complicated transaction, which lowered interest costs while maintaining existing covenants and all other material debt terms," said Andrew Jeanneret, CFO, Asbury.
Financed Right®: Aaron Rulnick: 203.418.9008 | [email protected] or Melissa Messina: 203.418.9015 | [email protected].
ABOUT HJ SIMS: Founded in 1935, HJ Sims is a privately held investment bank and wealth management firm. Headquartered in Fairfield, CT, Sims has nationwide investment banking, private wealth management and trading locations. Member FINRA, SIPC. Testimonials may not be representative of another client's experience. Past performance is no guarantee of future results. Facebook, LinkedIn, Twitter, Instagram.
CONTACT: Tara Perkins, AVP | 203-418-9049 | [email protected]
SOURCE HJ Sims
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