Sims Underwrites $40.5 Million Refinancing for an Affiliate of Volunteers of America
Partnered Right®
The Homestead at Anoka (“The Community” or “The Homestead”) is a Minnesota not-for-profit Corporation organized in 2010 for the development, construction and operation of a senior living campus in Anoka, MN. The current campus, which began operations in 2012, consists of 65 independent living units, 59 assisted living units, 24 memory care units and a 120 bed skilled nursing facility. The corporation is a subordinate affiliate of Volunteers of America National Services, a Minnesota nonprofit corporation.
Structured Right®
Sims was engaged by The Homestead to advance refund its Series 2011 Bonds. The 2011 bonds were originally issued to finance Phase 1 of the community. HJ Sims worked with The Homestead to achieve the following strategic objectives:
- Achieve a Present Value of Savings of 5% or greater
- Realize savings from debt service reduction in early years
Executed Right®
In order to meet The Homestead’s strategic financing objectives, Sims recommended moving forward with long-term, fixed-rate tax-exempt bonds (the “2017 bonds”) with no extension of the original final maturity. The issue was originally scheduled to come to market in late fall of 2016, but market conditions changed quickly after the 2016 Presidential election resulting in net present value of savings falling below target minimums. HJ Sims diligently monitored the market and waited until interest rates decreased sufficiently to where the client’s goal of 5% present value of savings could be achieved. To help achieve a higher return on investment of the escrow securities and improve present value of savings, the 2011 bonds were escrowed using Open Market Securities rather than the traditional use of State and Local Government Securities (SLGS). Further, to increase day’s cash on hand and realize savings as quickly as possible, HJ Sims structured the issue by front-end loading the savings in the early years of the new issue.
Financed Right®
HJ Sims successfully priced the $40,595,000 issue with a True-Interest-Cost of 5.171% in February of 2017. On a present value basis, the refunding saved The Homestead $1,726,225.77, or 5.04% of the par amount of the its objective to improve days’ cash on hand.
For more information on how The Homestead was Financed Right®, please contact:
Aaron Rulnick
(301) 424-9135