$30,767,440 refinancing and repositioning transaction in new mexico

description

La Vida Llena is a New Mexico 501(c)(3) corporation established in 1979. The organization operates a stand-alone lifecare CCRC in Albuquerque, New Mexico and has grown to include 284 independent living apartments and casitas, 45 assisted living units, 44 nursing beds and 16 memory support units. La Vida Llena’s bond indenture included highly restrictive covenants that controlled investment policy, limited capital expenditures and required extraordinary debt redemption at a premium from surplus cash. As such, La Vida Llena was generating below market investment returns and was required to retire debt rather than build capital reserves for its future.

La Vida Llena - Albuquerque, NM

challenges

La Vida Llena desired to redevelop and reposition its health center, proceed with its 5th phase of development for a new state-of-the-art 58 unit independent living facility as well as consider additional strategic opportunities to expand its mission. In order to accomplish these goals, the existing debt needed to be refinanced during one of the most challenging and restrictive credit markets in history. The refinancing also needed to be accomplished prior to La Vida Llena’s fiscal year end March 31st and the next extraordinary redemption date in order for La Vida Llena to retain its cash surplus.

solution

Sims negotiated and obtained a $30,767,440 loan commitment from two New Mexico banks resulting in a net present value savings to La Vida Llena, a cost of capital of 5.0% with a term of 5 years. The negotiated loan terms provided the flexibility and interest cost savings desired enabling the healthcare repositioning to occur as well as planning and pre-sales for the independent living expansion to proceed. With the elimination of its restrictive covenants and the increase in capital reserves, La Vida Llena is now well positioned to pursue an investment grade rating and access the tax-exempt bond markets at a lower cost of capital to finance its continued strategic growth. Closing occurred on March 30, 2009.