Herbert J. Sims & Co., Inc. - Alzheimer's Resource Center of CT

Alzheimer’s Resource Center of Connecticut

sims reduces alzheimer's resource center of connecticut's annual debt service by nearly 27%

Alzheimer’s Resource Center of CT, Inc. (the “Center”) operates a facility designed and operated specifically to meet the advancing needs of residents suffering from Alzheimer’s disease or other forms of dementia. Located in Southington, CT and opened in 1992, the Center offers 120 skilled nursing beds, 13 assisted living units and an adult day care program. The facility was designed for its specific purpose and includes 30-bed circular skilled nursing units with central atriums capped by a skylight, very wide wandering corridors and wandering gardens for residents.

Due to the specialized nature of the building design, original construction costs were relatively high on a per unit basis. In addition, the building was originally financed at 100% of cost, with no equity contribution. The result was an organization with a substantial annual debt service burden. Despite producing outstanding per unit cash flow, the Center continued to comfortably meet its debt service obligations, while struggling to meet all of its financial covenants.

Alzheimers Resource Center of Connecticut, Inc.

Alzheimers Resource Center of CT

Sims approached the Center in February 2007 about refinancing its bonds to take advantage of a favorable interest rate environment and realize long overdue relief from onerous financial covenants. Sims structured the Center’s refinancing bonds with an extended maturity to 2027 to maximize annual cash flow savings and one year of interest-only payments to allow the Center to strengthen its liquidity position. The result was a revitalized credit and substantial annual cash flow savings for the Center.

Despite the Bond Issuing Authority’s requirement to distribute the non-rated refinancing bonds in minimum denominations of $100,000, Sims successfully marketed the bonds to its industry best network of retail and institutional investors. The result for the Center was a new capital structure, with an average fixed rate cost of capital through 2027 of 5.43%. The Center’s annual level debt service payments were reduced from approximately $1.85 million to $1.355 million.