HJ Sims (Sims), a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the successful completion of a $61,785,000financing in September2017forAmerican Baptist Homes of the Midwest (ABHM) Obligated Group, headquartered in Eden Prairie, MN with 13 locations in six states.ABHM owns and operates health care facilities that provide skilled nursing, convalescent and rehabilitative care to elderly persons on an in-patient basis, and residential care facilities (Assisted Living), senior residential apartments (Independent Living) and group homes for the developmentally disabled (Crest Services).
Sims has worked with ABHM since 2011, completing six financings for the organization.Sims was engaged by ABHM to currently refund the Series 2007 bonds and advance refund its Series 2009 bonds. Sims worked with ABHM to identify other financing objectives such as lowering the Obligated Group’s cost of capital and achieve a minimum 5.0% present value of savings. Achieving each of these objectives would ultimately enable ABHM to increase its day’s cash on hand.
In order to meet ABHM’s strategic financing objectives, Sims recommended a fixed rate, tax-exempt bond issue (Series 2017 bonds). To generate greater upfront savings and cash for the organization, sinking fund payments were reduced in the first few years to lower overall debt service requirements. Because of IRS tax constraints relating to average useful life, it was important that the structure of the Series 2017 bonds not extend the maturity of the prior bonds.
On September 14, 2017, Sims successfully priced a $61,785,000 issue with an arbitrage yield of 4.811%. On a net present value basis, the refunding of the Series 2007 and Series 2009 bonds provided ABHM a savings of $6,517,278 or approximately 11.13% of the par amount of the bonds refunded. By having lower sinking fund payments in the early years of the issue, $5,363,551, or 82%, of the total savings are to be realized in the first three years. This allows ABHM to bolster its cash position and increase its day’s cash on hand. The average annual savings after the first three years will be $236,123 and the average coupon decreased from 6.79% to 4.95%, which achieves ABHM’s strategic objective of lowering the Obligated Group’s cost of capital.
“Sims is one of our most valued business partners. They have played a key role in our system-wide repositioning with respect to both construction financing and innovative re-financing strategies,” said Dave Zwickey, President and CEO, American Baptist Homes of the Midwest.
For more about Financed Right® solutions, please contact Mark Landreville at mlandreville@hjsims.com or Cristina Rappl at crappl@hjsims.com.
ABOUT HJ SIMS: Founded in 1935 on Wall Street, HJ Sims is a privately held investment bank and wealth management firm with $2.2 billion of assets under management. HJ Sims is one of the country’s oldest underwriters of tax-exempt and taxable bonds, having raised $22 billion for projects throughout the US. The firm is headquartered in Fairfield, Connecticut, with investment banking, private client wealth management and tradingoffices nation-wide. Pershing LLC, a subsidiary of The Bank of New York Mellon Corporation, is custodian of all client assets. HJ Sims is not affiliated withAmerican Baptist Homes of the Midwest.www.hjsims.com/ourstory. Investments involve risk, including the possible fluctuation of principal. Member FINRA, SIPC. Follow us on LinkedIn, Facebook and Twitter.
