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HJ Sims Leads Largest Refinancing for a Single Site Life Plan Community

January 17, 2018

FAIRFIELD, CT–HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, announced the closing of a financing for NewBridge on the Charles (NewBridge), located in Dedham, MA. The $236,300,000 financing, which closed on December 19, 2017, marked the largest fixed rate public bond issue in 2017 for the refinancing of a single site Life Plan Community.

NewBridge is managed by Hebrew SeniorLife (HSL), one of Massachusetts’ largest not-for-profit healthcare organizations, with nine campuses in metro-Boston, conducting aging research and providing geriatric care education via its affiliation with Harvard Medical School. NewBridge consists of independent and assisted living, and a health care facility.

NewBridge was developed in 2007 with a $457 million tax exempt bond issue underwritten by Sims, the largest issue of its kind. Despite opening during the 2009 recession, NewBridge reached 96% independent living occupancy within 25 months. Sims is privileged to have partnered with HSL for 25 years, financing NewBridge and a sister community, Orchard Cove, in Canton, MA.

Long-term capital stability was a vital objective for NewBridge. With existing debt held by a consortium of commercial banks and a maturity in 2019 there was inherent refinancing risk and future interest rate uncertainty. Achieving the lowest possible debt service was critical to NewBridge.

Sims worked with HSL management to achieve an initial credit rating of BB+ (Stable) from Fitch. This rating, along with HSL’s commitment to NewBridge through the contribution of $6 million toward the debt service reserve fund plus the ability to issue bonds with a 40-year maturity, substantially lowered the annual debt service.

With considerable uncertainty in the tax exempt bond market regarding tax reform and a likely future prohibition on advance refundings, Sims included a five-year call provision in the bond structure, providing maximum flexibility to NewBridge.

Despite distribution restrictions ($100,000 minimum purchase) by the issuer for below-investment-grade rated bonds, $16+ million in bonds were sold to individual investors with 40 institutions purchasing the remaining bonds. Sims’ distribution strength provided lower than anticipated interest rates, from 1.85% (one-year maturity) to 4.125% (40-year maturity).

“The Sims team led a near seamless process for NewBridge’s $236.3 million public bond issuance,” said James Hart, Chief Financial Officer, HSL. “Sims’ deep knowledge of the tax exempt market and CCRC business model enabled HSL to obtain a favorable credit rating for NewBridge on a non-recourse basis. They did an excellent job as the book-runner, staging the co-manager to complement its own investor base to achieve a significant over-subscription and lower cost of capital for NewBridge. Sims’ quality of execution exceeded our expectations.”

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