Investment Banking firm HJ Sims recently announced the successful closure of $6.6 million in financing for pre-development capital toward the pursuit of an expansion at the Raleigh, NC-based life plan community Samaritan Housing Foundation, d/b/a Searstone Retirement Community. The expansion will double the community’s size while adding common and green spaces. But a banker who helped see the financing to fruition says it didn’t come without challenges amidst the current marketplace.
“In March and April, the initial uncertainty and anxiety around COVID-19 created significant dysfunction and panic in the municipal markets with a major sell off and outflows from the bond funds,” Tom Bowden, vice president of investment banking at HJ Sims told McKnight’s Senior Living. National headlines highlighting the tragic effects of the virus on nursing homes also were leading to a disconnect within the market between the perception and reality regarding what was happening in senior living communities, he added.
Further, the small deal size made investors reluctant to spend the time analyzing a credit as their chances of getting a sizable allocation weren’t high. This limited demand for the bonds, Bowden noted.
“It’s a dynamic that exists in ‘normal markets,’ and was amplified in the COVID environment, where the market was effectively closed,” he said. “This was a tricky deal in normal times, but market conditions and a tight time frame made it particularly challenging.”
Ultimately, Bowden said that remaining calm, staying the course and being confident in the project’s need were “good medicine” for the uncertainty. Teamwork with the Searstone executive team, board of directors, management company and development partner was the other key driver in the successful completion of financing and in obtaining bondholder consent to issue the proposed debt.