sims raises over $18,000,000 of equity to joint venture with sunrise senior living affiliate

Herbert J. Sims & Co. (“Sims”) provided over $18,000,000 of equity to a joint venture (the “Joint Venture”) with Sunrise Senior Living Investments, Inc., an affiliate of Sunrise Senior Living, Inc. (“Sunrise”). Sunrise is the nation's largest provider of senior living services, employing more than 40,000 people. As of December 31, 2005, Sunrise operated 415 communities in the United States, Canada, Germany and the United Kingdom with a combined capacity for more than 50,000 residents. The Joint Venture was created to develop the residential condominium portion of Fox Hill, a 240-unit senior living community in Bethesda, Maryland (the “Project”). In addition to the 240 condominium units, an 83-unit assisted living facility will be located on the site.

objective

Recently, Sunrise approached Sims to be a joint venture partner to develop the condominium portion of the Fox Hill (240 for-sale condominiums). Sunrise’s objective was to find an equity partner that could understand the opportunity and raise capital quickly.

challenge

The challenges were (1) underwriting the condominium portion of the Project, as well as the assisted living portion of the Project, in which Sims is not an investor; (2) providing equity for a start-up project with no current return on the investment for three years; and (3) closing on the investment on an expedited basis.

Artist Rendering of Fox Hill - Bethesda, Maryland

solution

Sims Fox Hill, LLC was capitalized by Sims selling equity units to its high net worth client base. Sims Fox Hill then made an equity investment in the Joint Venture. The funds raised by Sims, together with capital invested by Sunrise and a construction loan, were used to reimburse Sunrise for development of the residential condominium.and fund construction of the residential condominium units.

Sims’ structure was attractive to Sunrise for several reasons: (1) since the investment is made directly by a Sims’ controlled entity, the Joint Venture benefited from Sims’ extensive high net worth client base without having to communicate with a number of third-party investors; (2) Sims was able to be the majority owner of the Joint Venture, while allowing Sunrise to remain as the managing member with day-to-day control; and (3) the execution of the transaction was efficient since Sims was able to complete its offering and close the investment on an aggressive timeline.

result

The equity contribution by Sims allowed the Joint Venture to close the financings on an expedited basis. The equity provided by Sims and Sunrise satisfied the requirement of the senior lender. Construction is currently underway and closings of the condominium units are scheduled to commence in January, 2008.