Herbert J. Sims & Co., Inc.

Selah

sims raises $27,230,000 for acquisitions by newly formed company

Asbury Place - Gulf Breeze, FL

HJ Sims Investments, LLC (“HJSI”) raised $27,230,000 of equity, junior debt and senior debt for an affiliate of Selah Management Group (“Selah”) to acquire three (3) senior living communities located in Gulf Breeze, Florida; Savannah, Georgia; and Tupelo, Mississippi (the “Projects”). Selah is a regional management group based in the southeastern United States whose executives have more than 60 years of combined experience in the senior living industry.

opportunity

Sims was approached by Selah regarding the formation of an entity to give Selah a platform to grow its company through acquisitions and development. Of the first three (3) projects identified, two were owned by local groups and one by a national senior living company. The Projects included in the transaction were Asbury Place in Gulf Breeze, Florida, a 61-unit assisted living community; Savannah Commons in Savannah, Georgia, a 219-unit retirement community consisting of independent, assisted and Alzheimer’s units; and AvonLea, a 62-unit assisted living community with 16 fee-simple cottages in Tupelo, Mississippi.

AvonLea - Tupelo, MS

challenges

The challenges were: (1) creating a platform to acquire the current and future Projects and enable Selah to have the ability to grow; (2) maximizing the amount of senior and junior debt that could be supported by the Projects to provide a 90% loan to cost capital structure; (3) combining two cash flowing communities with one underperforming community; and (4) ability to close on three properties with three different sellers by June 1st.

solution

Savannah Commons - Savannah, GA

The solution required first, the use of Herbert J. Sims & Co., Inc.’s extensive accredited, retail investor base to fund equity and junior debt and second, negotiation and placement of senior debt with a first mortgage lender. HJSI created a single-purpose entity which was capitalized by Herbert J. Sims & Co.’s placement of taxable bonds to its high-net-worth client base. HJSI then funded an equity investment and second mortgage loan. The funds raised by Sims, together with capital invested by Selah, were used to acquire the Projects.

Sims’ structure was attractive to Selah for several reasons: (1) since the investment is made directly by a HJSI controlled entity, Selah benefited from Herbert J. Sims & Co.’s extensive high-net-worth client base without having to communicate with a number of third-party investors; (2) allowed Selah to establish a platform to provide equity financing for future transactions over the next several years; (3) Selah could have a long-term management agreement; and (4) the transaction was completed and closed on an aggressive timeline with three different sellers.

result

The equity and subordinate debt contribution by HJSI recapitalized the facilities and satisfied the senior lender’s requirements.