HJ Sims' Refinancing Provides Debt Service Savings and Liquidity Relief to Established Arizona Senior Living Provider

FAIRFIELD, CT– HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, announced that on December 15, 2017, the firm closed a $19,000,000 refunding loan and arranged financing for a $5,000,000 non-revolving line of credit for Westminster Village, located in Scottsdale, AZ.

Westminster Village, Inc. (Westminster) is a premier, not-for-profit life care retirement community providing resort style amenities, housing and health care to residents through a retirement community containing 250 independent living apartments, 23 assisted living units in The June & Frank Sackton Assisted Living Center and 49 beds in the Weyrich Health Care Center. Wesminster has historically operated near full occupancy.

Meeting Westminster’s needs, Sims recommended a bank loan financing to obtain the lowest cost of capital. Carefully evaluating weighted average life considerations on outstanding debt, Sims determined that Westminster could extend the amortization on the outstanding loan by 14 years, maintaining tax-exempt status. Sims crafted an RFP that was distributed to 30+ banks, resulting in seven term sheet proposals that matched Westminster’s terms at considerably lower rates than its current interest rate.

Sims weighed the benefits of the seven proposals, five of which proposed swap solutions. Though the swap rates were attractive, the news of the pending elimination of LIBOR brought uncertainty to the future of the swap contracts. Ultimately, Sims negotiated with Western Alliance Bank (Bank) a financing structure at a “natural” fixed interest rate below the interest rates quoted from other banks that were utilizing a swap. The loan can be called after seven years without penalty. Sims was able to lock in a 3.42% fixed rate through a 10-year commitment.

With pending tax law changes, Sims incorporated provisions that limit Westminster’s exposure to any changes in tax law, capping the amount that their interest rate can increase. Additionally, the Bank offered Westminster a $5,000,000 non-revolving line of credit that can be used for capital expenditures with a two-year draw period, with draws to be termed out coterminous with the refunding term loan.

Westminster lowered the rate on its outstanding interest rate from 6.29% to 3.42%, thereby lowering its debt service payment by $1 million+ annually over the next 10 years. The transaction also provides for flexibility in future capital planning by allowing for the debt to be called without penalty after seven years. The new non-revolving line of credit will allow Westminster to save operating cash flow, which is expected to add nearly $5 million to Westminster’s liquid reserves (and allowing it to nearly double its days cash on hand). After a diligent process and rigorous vetting of each proposed option, Westminster obtained a financing option that provided financial flexibility and borrowing capacity at a significantly lower cost of capital.

“Sometimes in life, you just get lucky. We knew our debt was due/maturing in 2018; we knew we needed help. Where to turn, who to trust? In 1994, Sims was there for Westminster, underwriting the debt. We attended a Sims sponsored event, met with Mr. Sims and Jimmy Rester, scheduled a campus visit and were impressed with how enthusiastic Mr. Sims and Jimmy were about our campus, our culture. We felt Sims was the first “broker” who understood who we were, what we were about.

We closed on our new tax exempt bonds in mid-December, 2017 - Jimmy and Sims leading the way. During a tempestuous rush for many to close on tax exempt borrowings, we were treated like we were the only Sims client. Sims was with us every step of the way, controlling, managing, always looking out for what was in our best interest. In a time where we should all be counting our blessings, our greatest blessing was starting the conversation with Mr. Sims and Jimmy,” said Bud Hart, CEO/CFO, Westminster Village.

For Financed Right® solutions, contact James Rester at 214-559-7175 | jrester@hjsims.com.

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, CT, with investment banking, private client wealth management and trading offices 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 with Westminster Village. Please visit: http://www.hjsims.com/ourstory. Investments involve risk, including the possible fluctuation of principal. Member FINRA, SIPC. Follow us on LinkedIn, Facebook and Twitter.