Herbert J. Sims & Co., Inc.

Sims Radius II

sims raises equity for vacant nursing home acquisition out of receivership

Herbert J. Sims & Co., Inc. (“Sims”), through its affiliate HJ Sims Investments, LLC, provided joint venture equity to an affiliate of Radius Management Services (“Radius”) to acquire Hillside Health Center, a 165-bed skilled nursing facility in Providence, Rhode Island (the “Facility”). Radius, based in Massachusetts, is one of New England’s largest privately-held eldercare management companies and currently manages 1,742 skilled nursing, assisted living and hospital units, consisting of (i) twelve standalone nursing care facilities that it either owns or leases; (ii) one nursing care and assisted living/dementia care facility; and (iii) two long-term acute care specialty hospitals in Massachusetts and Rhode Island.

challenge

Hillside Health Center

Sims was approached by Radius to help finance the acquisition of the Facility. The Facility had been in receivership with the State of Rhode Island for several years and finally went to auction in late 2007. The challenges were primarily: (1) understanding Radius’ business plan to renovate a vacant nursing home, which had recently been through financial difficulties; (2) structuring the investment to provide the flexibility desired by Radius, which required that the real estate be acquired in one entity and the personal property in another, with a complex lease structure to meet Rhode Island Department of Health’s strict requirements; and (3) closing within a very short period of time by December 31, 2007.

solution

Sims’ creative approach allowed Radius to raise the required equity to close on the acquisition of the Facility, while also providing Radius with a buyout opportunity of Sims’ investment. This structure provided the senior lender with its required equity and Radius with a financing that has debt features. Sims understood the value that the new management will bring to the transaction which will enable it to fill-up and operate the Facility effectively.

implementation

Sims quickly raised its capital through a private placement to its high-net-worth client base during December. The Sims financing was attractive to Radius for several reasons: (1) Sims’ expertise in structuring complex equity financings for senior living projects; (2) Sims’ ability to provide a majority of the equity in a timely fashion; and (3) Sims’ creation of a purchase option on its interest, allowing Radius to buy out Sims’ investment.

result

The capital provided by Sims, together with the capital provided by Radius, satisfied the loan-to-value requirements of the senior lender. Sims’ creativity and flexibility enabled it to finance a modest-sized transaction with great efficiency.

"Once again Sims proved to be a highly-valued financial partner as Radius proceeds with strategic growth. Sims’ unique understanding of long-term care and commitment to quality projects and management means that we know we have access to cost-effective capital when we need it."

Christine Bassett
Co-Founder
Radius HealthCare Centers