sims raises $9.5 million of equity for benchmark assisted living acquisition

Herbert J. Sims & Co., Inc. (“Sims”), through its affiliate HJ Sims Investments, LLC, provided joint venture equity to an affiliate of Benchmark Assisted Living, LLC (“Benchmark”) to acquire Heritage at Danvers (the “Project”), an 80-unit assisted living and dementia care community. Benchmark Assisted Living is the largest owner/operator of service-enhanced senior housing in New England. Including the Heritage at Danvers acquisition, Benchmark will operate forty-four (44) senior living communities in New England, with Sims as a strategic capital partner in all of its communities.

Heritage at Danvers - Danvers, MA

challenge

Benchmark had negotiated to acquire the Project at an attractive price; however, the transaction required the assumption of an existing mortgage from the Massachusetts Housing and Finance Agency (“MHFA”). The MHFA debt was at an extremely low loan-to-value, and there was no opportunity for supplemental debt. This capital structure was generating a low return for a typical partner. As such, Benchmark needed a partner who was willing to finance the Project on these terms, and, as the majority owner in the Project, be approved by HUD. The uncertain debt, equity and economic environments created additional challenges.

solution

Benchmark and HJ Sims Investments formed a joint venture to acquire the Project. Sims provided 80% of the equity and Benchmark 20%. To address the transaction’s low loan-to-value, Sims bifurcated its portion of the equity contribution by creating both a debt piece and an equity piece to raise the $9.5 million of equity needed.

The equity raised by Sims, together with funds invested by Benchmark’s key principals and Board Members, is being used to meet Benchmark’s funding commitments.

implementation

HJ Sims Investments created Sims Benchmark IV, LLC, a single purpose entity, which was capitalized through two private placements consisting of $4.5 million of equity and $5.0 million of bonds. Sims raised its capital efficiently and was ready to close early.

result

The result was a smooth closing while many other equity sources were pulling out of their commitments. Sims was able to overcome these challenges through the creativity of its banking team and strength of its high-net-worth investor base.

Herbert J. Sims & Co. thanks Benchmark Assisted Living for the opportunity to partner with a premier operator on the implementation of their long-term strategy.

Direct equity investments with excellent owner/operators such as Benchmark are the latest example of Sims using its extensive high-net-worth client base and bankers’ creativity to provide equity to senior housing providers. Sims excels in filling the niches that allow an owner or developer to complete a transaction by providing creative financing such as preferred equity, mezzanine debt or bridge financing.