CHARLOTTE, N.C. — HJ Sims has arranged a $44 million refinancing for Aldersgate United Methodist Retirement Community, a continuing care retirement community in Charlotte.
Sims partnered with Aldersgate in 2019 with a financing for Generations at Shalom Park. In 2020, Sims identified a refunding opportunity for Aldersgate’s outstanding 2013 bonds. In 2017, the Tax Cuts and Jobs Act (TCJA) eliminated advance refundings using tax-exempt municipal bonds. Therefore, Sims utilized Cinderella Bonds, which would be taxable until the optional redemption date, after which the bonds would convert to tax-exempt, complying with TCJA.
Sims proposed that the Cinderella Bonds be purchased by a commercial bank, eliminating the debt service reserve fund requirement for the 2013 bonds. Sims customized the amortization schedule to optimize Aldersgate’s aggregate maximum annual debt service (MADS), creating $185,000 in reduced MADS.
In 2021, Aldersgate pursued the Cinderella financing with Sims serving as placement agent. Sims and Aldersgate’s financial advisor, Pearl Creek Advisors, conducted a large bank solicitation and held a virtual site visit, requesting proposals for refinancing Aldersgate’s outstanding bank bebt, which was privately held by Truist Bank. The goals of this refinancing included extending the put date, lowering the credit spread by 80 basis points, and eliminating variable interest rate risk.
Sims and Pearl Creek Advisors negotiated with multiple banks on behalf of Aldersgate to receive the most competitive terms, selecting Truist Bank, whose commitment featured attractive interest rates, a 12-year commitment period, covenants that largely conformed to Aldersgate’s master trust indenture, and a SOFR-based (Secured Overnight Financing Rate) loan.
Aldersgate and Truist closed on the $28.7 million bonds to defease the 2013 bonds and the $15.3 million bonds to refinance the bank debt.