$20 million pre-finance bridge loan in texas

description

Air Force Villages is a “BBB+” rated organization consisting of two CCRC campuses, a Foundation and other related organizations located in San Antonio, Texas. It is a premier military retirement community serving retired officers and their families of the Army, Navy, Air Force, Marines and Coast Guard. Air Force Village I is located near Lackland Air Force Base and premier medical facilities. It opened in 1970, and is home to over 500 residents. Air Force Village II has grown to a vibrant neighborhood of 700 residents since its opening in 1987.

Air Force Village II

Air Force Village recently developed a “five star” master plan to significantly expand, upgrade and reposition both campuses to include new home designs, new garden neighborhoods, Town Square living, new shopping and dining experiences—all within gated communities.

challenges

Air Force Village desired to announce and proceed with the first phase of their master plan in October 2008 during one of the most challenging capital market and credit periods in history. Air Force Village needed up to $20 million of interim capital in order to fund initial development related costs, pre-sale activities and to construct new ranch homes prior to closing on permanent financing planned in late 2009. A low cost of capital with a flexible structure and a 5 year term was required in order to comply with additional debt provisions of an existing indenture, maintain its ‘BBB+’ rating, fund costs without liquidating investments, and allow for future expenditures to be funded that were not yet fully defined.

solution

Sims obtained proposals from three Texas based banks seeking to participate in Sims’ led senior living transactions in Texas. The financing included a $20 million bridge loan with an interest only revolving structure. The all-in cost of capital proposals ranged from approximately 3.0% to 4.0% on a taxable basis and included prime and LIBOR based interest rate options. The interest only component included a three year term followed by a two year mini-perm option to accommodate financing covenant requirements. The bridge financing is planned to be taken-out with a tax-exempt bond issue in 2009 but remains available to fund the interim finance needs for the next phase of the Master Plan. Closing occurred on schedule on November 18th, 2008.