| Glenmoor at St. Johns |
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saving over $1 million per year in debt service Completing its fifth underwriting for Life Care Pastoral Services, Inc. (LCPS) of Ponte Vedra Beach, Florida, on October 11, 2006, Sims underwrote $59,555,000 of tax-exempt fixed and adjustable rate bonds to advance refund bonds issued in 2000 for the construction and operation of Glenmoor at St. Johns, the second LCPS campus, and to provide $6 million for construction of 15 new cottages. background LCPS is the parent company for Glenmoor, located near St. Augustine, and for Vicars Landing, a CCRC financed by Sims in 1987 and refinanced in 1993. While financially separate, the two campuses are managed by LCPS Management, Inc., a third affiliate.
challenges Due to local market conditions, the events of September 2001 and difficulty in reaching its targeted market, the community was slow to fill; because Florida will not allow use of 75% of entrance fees received until the community has achieved 70% occupancy, Glenmoor experienced significant pressure on operating cash. solutions Working with the community and the provider of the letter-of-credit for the variable rate bonds, Sims helped to negotiate an extension of the letter-of-credit to allow for use of certain entrance fees for operating expenses. A revised marketing strategy and improved sales training, as well as growth in Glenmoor’s surrounding market, resulted in rapidly improving sales and occupancy, so that by November 2005, the community was at 95% occupancy of the residential units, with substantially full occupancy of the health care center. The $27,000,000 variable rate bonds were repaid in full in July, 2005. During 2003, 2004 and 2005, Sims met with the Board of Directors and Management of Glenmoor numerous times and provided a number of possible alternatives for restructuring, refinancing or otherwise reducing annual debt service; during those years a variety of options were considered, with none providing an acceptable solution. As 2006 began, however, it became apparent that the relatively low interest rates and flattening yield curve could provide an attractive environment for advance refunding of the remaining 1999 bonds. In June 2006, Sims was retained to underwrite an advance refunding of the bonds. Sims suggested extending the final maturity of the 2006 bonds to 35 years, with a final maturity date of 2041; in addition, $4,000,000 of adjustable rate bonds were included in the financing, to allow Glenmoor to potentially reduce debt prior to the initial call date of the 2006 fixed rate bonds. Exceptional demand generated through Sims’ institutional and retail distribution network allowed the bonds to be priced at favorable levels, with the 35 year maturity priced to yield 5.375% result The resulting structure provides annual cash flow savings for Glenmoor through 2029 of more than $1,000,000, immediately improving the company’s financial stability and helping to moderate future resident fee increases. In addition, the financing provides funding for 15 new cottages, which will generate more than $6 million in initial entrance fees and additional monthly service fee revenue. An important part of the financing structure was Sims’ analysis of various options for funding of the defeasance escrow associated with the refunding of the 1999 bonds. By reviewing and analyzing all alternatives and selecting agency securities that provided the maximum yield, Sims was able to structure an escrow at the lowest available cost. Sims also assisted in negotiating the escrow agreement among Glenmoor, the provider of escrow securities and the bond trustee. Glenmoor is now very successfully positioned to serve its residents and to take advantage of the rapidly-expanding North Florida market. |
Glenmoor is a non-profit lifecare community currently comprised of 144 residential units, including apartments, cottages, patio homes and estate homes, and a health center consisting of 15 assisted living suites, 15 dementia care suites and 30 skilled nursing beds. Seed capital for the project was provided by Sims’ MatchCap
