sims finances alliance health or southern massachusetts nursing home acquisition for 5-year fixed rate of 4%

In early 2007, Sims was engaged by Alliance Health and Human Services, Inc. (“Alliance”) to finance its acquisition of a skilled nursing facility in Braintree, Mass., which includes 101 beds, 19 of which are located in a dedicated sub-acute care unit (“Braintree Facility”).

Alliance is a Massachusetts-based, non-profit organization, which owns skilled nursing facilities in the Greater Boston area and administers a foster care program that provides therapeutic and specialized foster care services to approximately 2,200 children across the United States. Alliance entered into an agreement to acquire the Braintree Facility from a joint venture which includes Radius Healthcare (“Radius”). An affiliate of Radius will continue to operate the Braintree Facility via a third party management contract entered into with Alliance.

Braintree, MA Facility

Given favorable market conditions, Sims recommended a letter of credit enhanced variable rate bond structure, with the rate fixed for an intermediate period via an interest rate swap. Sims secured competitive letter of credit proposals from five banks. Given the established purchase price of the facility and Alliance’s desire to limit its equity contribution, Sims led substantial negotiations with each bank with regard to required loan-to-value ratios, financial covenants and financial terms of the letter of credit. Alliance selected Citizen’s Bank to provide the letter of credit to enhance the variable rate bonds. The letter of credit carries a five year term, with a provision to extend the term for one year at the conclusion of the third year and each year thereafter.

On October 3rd, Sims closed on the $14,605,000 variable rate bond issue. Including the 5-year fixed rate swap, letter of credit fees and remarketing fees, Alliance’s all-in 5-year fixed-rate cost of capital is approximately 4.00%. This result provides Alliance with an exceptionally low cost of capital and very favorable financial covenants as it adds the Braintree Facility to its roster of skilled nursing facilities in the Greater Boston area.