Herbert J. Sims & Co., Inc.

Oasis

sims provides equity for replacement assisted living facility

Herbert J. Sims & Co., Inc. provided equity to finance The Oasis Assisted Living Facility in Meadows Place, Texas (the “Oasis”). Oasis is replacing, expanding and relocating a 102-bed assisted living community with a new 153-bed, 96,000 square foot facility. The Oasis will be an integral part of the Oasis Medical Campus, which will include the expanded assisted living facility, an independent living building, a hospital, a long-term acute care hospital, four medical office buildings and parking garages.

the challenge

Oasis Assisted Living Facility

Sims was approached by Al Fairfield, a Houston area multi-family and commercial real-estate developer and owner/operator of a 102-bed assisted living facility, to finance the replacement and expansion of his existing assisted living facility. The existing facility was in the middle of a 12-acre parcel which Mr. Fairfield wished to develop, along with adjacent land, into a 26-acre medical office campus (the “Oasis Medical Campus”). The Oasis Medical Campus would include the expanded assisted living facility, an independent living building, a hospital, a long-term acute care hospital, four medical office buildings and parking garages.

The challenges were (1) financing the first phase of the project, which includes construction of the assisted living facility and the first medical office building; (2) keeping the existing assisted living facility open during construction to maximize cash flow and minimize fill-up risk; and (3) structuring the project’s financing so that the permanent loan could qualify under Fannie Mae or Freddie Mac guidelines, since Fannie Mae and Freddie Mac do not allow second mortgages.

the solution

First, Sims worked with the developer to minimize his equity requirement for the assisted living facility, allowing him to use his equity for other parts of the Oasis Medical Campus. Second, Sims’ expertise in the senior living industry was instrumental in convincing the construction lender that keeping the existing assisted living facility open was the right thing to do and that the owner’s financial projections were realistic. Third, Sims’ experience, flexibility and creativity were critical in developing an equity structure that would qualify under Fannie Mae and Freddie Mac requirements.

the implementation

Sims raised the equity through a private placement to its high net worth client base. Sims represents its clients, so to Oasis Sims is the single source of equity funding. Also, because Sims raised a majority of the required equity, Oasis was able to use more of its resources for the rest of the campus.

the result

The equity provided by Sims, together with equity provided by Oasis’ partners, satisfied the loan-to-value requirements for a favorable construction loan.