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Seashore Gardens Living Center sims refinancing eases covenants and saves over $3 million description Seashore Gardens Living Center is a 151-bed skilled nursing facility and a 35-unit assisted living facility owned and operated by Hebrew Old Age Center of Atlantic County t/a Seashore Gardens. Seashore Gardens’ origins date back to 1916 in Atlantic City. Seashore Gardens was built in 2001 in Galloway, New Jersey as a replacement for its Atlantic City facility. The construction of the Galloway replacement facility was financed with non-rated, tax-exempt bonds underwritten by Herbert J. Sims & Co., Inc. in 2001. challenge
Seashore Gardens’ main goal was to lower its annual debt service without bearing any interest rate risk. Its outstanding bonds were not callable until 2011, implementation Herbert J. Sims & Co. was engaged to secure the lowest interest rates for Seashore Gardens within 90 days. Sims structured the financing with non-rated, fixed rates, revised covenants to give Seashore Gardens the desired flexibility and quickly assembled the financing team. Sims brought the financing to market as soon as the New Jersey Economic Development Authority approvals were finalized. result Seashore Gardens issued $31.36 million of tax-exempt non-rated bonds structured with three term bonds, for an average yield of 5.35%, among the lowest yield for a non-rated long-term care facility and below the yield goal set by management and the Board. The superior pricing on Seashore Gardens bonds resulted in the following benefits:
In addition, Seashore Gardens realized benefits of a reduction in the days cash on hand requirement by 10 days and more flexibility on the use of its land for other revenue-generating purposes. |
which required it to advance refund the bonds. Seashore Gardens wanted to take advantage of the historically low interest rates for high yield, tax-exempt bonds and the flat yield curve which enabled it to invest the refunding escrow at high, taxable interest rates, thus minimizing negative arbitrage on an advance refunding. Seashore Gardens did not want to lose the market opportunity that was presented with this flat yield curve so it hoped to complete the refunding in a very short time frame. Seashore Gardens also desired to ease their financial covenants and other requirements.
