SAN DIEGO — HJ Sims has arranged $77 million in financing for Casa de las Campanas, a continuing care retirement community (CCRC) in San Diego.
Life Care Services operates the community, which LCS Development built. The community is in the middle of a multi-phase master plan that includes renovation and expansion of its facilities, including new skilled nursing, independent living and memory care areas.
In 2014, Sims secured bank financing through City National Bank (CNB) for Phase I of the plan. Sims negotiated the Phase II financing terms with CNB in 2017. Structuring the financing with CNB and Cal Mortgage, Sims worked to secure $39 million in direct bank placement bonds from CNB for Phase II expansion in 2017.
LCS applied $7.1 million of equity and transferred $5.5 million of unused Phase I proceeds toward Phase II. Sims and Casa then explored refinancing options for outstanding 2010 bonds and outstanding bank debt to reduce overall cost of capital.
In 2017, the passage of the Tax Cuts and Jobs Act eliminated the ability for Casa to advance refund its outstanding 2010 bonds. Sims and CNB considered pricing a forward starting tax-exempt refinancing, helping Casa to lock in an interest rate to refinance its outstanding 2010 bonds, 2014 bank debt and the outstanding portion of the 2017 bonds, while funding the remaining undrawn portion of the 2017 bonds.
COVID-19 upset markets and bank financing, therefore the financing plan evolved from a forward refunding to a current refunding, which was a $77 million credit commitment offered by CNB.
With the closing of the refinancing, LCS refinanced outstanding legacy debt, as well as debt related to the phased expansion. The transaction results in annual cash flow savings of nearly $2.5 million through 2035.