FORWARD STARTING SWAP AND BANK BONDS ALLOW VICAR’S LANDING TO LOCK IN SAVINGS
FAIRFIELD, CT–HJ Sims, a privately held investment bank and wealth management firm founded in 1935, is pleased to announce the successful refinancingin the amount of $15,725,000 in November 2016for Vicar’s Landing (Vicar’s), a Life Plan Community located in Ponte Vedra Beach, FL.
Vicar’s independent living occupancy has been 95%+ for years, andit recently completed a renovation. Sims has served as Vicar’s investment bank since its inception. In September 2015, Sims surveyed refinancing solutions for Vicar’s outstanding 2007 bonds, which were not eligible for an advance refunding as they had repaid Vicar’s 1993 bonds that were used to advance refund the original1987 bonds.
Vicar’s goal was to reduce its overall debt service, but it was exposed to interest rate risk. Vicar’s and Sims obtained a commitment letter to refinance in January 2016 from the community’s commercial bank. The closing process included the execution of a forward starting swap in May 2016. The swap went into effect in November 2016, which was also when the escrow was funded for the current refunding of the 2007 bonds. The forward starting swap was required to be issued on an unsecured basis until the actual closing since a secured swap would have required bondholder approval.
As a result of the refinancing, Vicar’s Landing achieved the following objectives:
- Vicar’s Landing locked in a 2.76% interest rate for 10 years versus the 5% interest rate on its 2007 Bonds. Vicar’s removed interest rate and capital risk and saved a net present value of $2 million.
- Vicar’s reduced its annual debt service by approximately $880,000 per year over the next 10 years. The forward starting swap realized an additional $312,000 of savings, allowing Vicar’s to utilize $1.2 million of bond proceeds for capital improvements.
- The forward starting swap rate included a seven-year cancellation clause, enabling Vicar’s to maintain the option to refinance the 2014 and 2016 bonds when the mandatory tender for the 2014 bonds occurs in January 2024. The 2016 refinancing was also issued as refunding indebtedness under its 2007 indenture so that all covenants were maintained.
“We are very pleased with how this forward swap and refinancing worked out. With great, long-term partners like H.J. Sims, we are able to work creatively to achieve long-term goals. The savings going forward will help us to better serve our residents and meet our mission,” said Bruce Jones, CEO, LCPS Management
For more about HJ Sims and how we can offer you Financed Right® solutions, please contact Rob Gall at [email protected] | 407-313-1701.
ABOUT HJ SIMS: Founded in 1935 on Wall Street, HJ Sims is celebrating more than 80 years of service as a privately held investment bank and broker-dealer with $2.2 billion of assets under management. HJ Sims is known as 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 trading offices in Maryland, Massachusetts, Florida, Minnesota, New Jersey, Pennsylvania, Texas and Puerto Rico. Pershing LLC, a subsidiary of The Bank of New York Mellon Corporation, is custodian of all client assets. HJ Sims is not affiliated with Cadbury-Lewes. For more information, please visit: www.hjsims.com/ourstory. Investments involve risk, including the possible fluctuation of principal. Member FINRA, SIPC. Follow HJ Sims on Facebook, Twitter and LinkedIn.