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HJ Sims Partners with Lutheran Senior Services to Finance Campus Expansion, Capital Improvements While Preserving Future Entrance Fees to Refund Higher Coupon Bonds

April 3, 2019

FAIRFIELD, CT–HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the successful $92,370,000 financing, which closed in February 2019, for Lutheran Senior Services (LSS).

Located in Missouri and Illinois, LSS is a non-profit parent company that, with its subordinate entities, owns and operates 17 communities, all managed by LSS. LSS provides independent living, affordable housing, assisted living, assisted living memory care, skilled nursing care centers, skilled memory care, and short-stay rehabilitation services.

Sims was engaged by LSS to underwrite the financing of an expansion to the Mason Pointe community and additional planned capital improvements at other communities in the LSS network. Sims identified bonds that were bearing interest above current market rates and a strategy to repay those bonds on a current basis to reduce the interest cost to LSS. Sims and LSS devised a plan of finance that featured a relatively short maximum term while providing a level debt service platform and maximizing the application of anticipated future initial entrance fee inflows to repay higher-rate bonds.

Sim proposed utilizing a smaller portion of the entrance fee pool to repay bonds allowing LSS to take advantage of relatively historically low interest rates for longer-term debt, call provisions that took into account the impact of the elimination of advanced refunding bonds, and a longer term entrance fee bond that was callable, if not fully repaid within three years.

On January 25, 2019, Sims successfully priced and subsequently closed on February 25, 2019, the aggregate $92,370,000Fitch BBB rated, fixed-rate bond financing. The LSS bonds were widely distributed, and the implemented financing structure allows LSS to achieve its objectives of minimizing overall interest expense while preserving a portion of projected initial entrance fee inflows to repay higher coupon indebtedness in the future.

“LSS chose Sims for it most recent financing which included the funding for a major independent living expansion for us and funding for additional projects. While the short-term goal was to fund the construction of expansion, the longer-term goal was to provide additional future capital that would allow us to refinance bonds not yet callable that have higher interest rates than the current market. We had an aggressive time table that was carried off with no issues. The team, headed by Aaron Rulnick and Melissa Messina, was extremely professional and evaluated our existing documents thoroughly and provided meaningful insight and helped position us for future financings. The sales effort resulted in strong demand for our bonds and we were very pleased with the results,” said Paul Ogier, CFO, LSS.

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