Sarasota-Manatee

communicating with your bondholders to ease covenants, improve your capital structure or refine your debt on more favorable terms

On June 2, 2005, Sims completed a $36,500,000 bond issue for The Sarasota-Manatee Jewish Housing Council (“SMJHC”), which owns a continuing care retirement community of 191 independent and 102 assisted living units in Sarasota, Florida. The independent living portion of the campus was built in 1992, followed by an expansion which included the assisted living units in 1996. Sims was a co-managing underwriter for the 1996 bond financing but was selected as sole manager for the 2005 transaction. The assisted living expansion was plagued by construction delays and unbudgeted construction costs, and it ultimately experienced a slower than expected fill-up. As a result, SMJHC was in violation of several bond covenants related to its outstanding 1995 and 1996 bonds. Over the years, SMJHC has made substantial progress improving its financial performance but continued to face a debt service burden beyond its ability to comfortably meet despite being fully occupied.

Based on SMJHC’s situation, Sims recommended that SMJHC solicit its existing bondholders to direct the trustee to accelerate the bonds. This bondholder-directed acceleration allowed SMJHC to current refund its existing debt in full. Simultaneously with the acceleration, Sims negotiated a letter of credit for variable rate bonds to refinance SMJHC’s outstanding bonds. The letter of credit backed bonds, together with other thirdparty credit support, enabled SMJHC to reduce its debt service by $600,000 to $1,000,000 annually. SMJHC’s new capital structure will enable it to quickly build liquidity and continue to provide exceptional service to its residents.