Sims Joint Ventures With Benchmark to Recapitalize a $450 Million Portfolio

Herbert J. Sims & Co., Inc. (“Sims”), through its affiliate HJ Sims Investments, LLC, provided joint venture equity to an affiliate of Benchmark Assisted Living, LLC (“Benchmark”) to recapitalize a portfolio of nineteen (19) senior living communities located in Connecticut, Massachusetts and Rhode Island (the “Portfolio”). The Portfolio consists of 2,044 beds, including 462 independent living units, 879 assisted living units and 703 Alzheimer’s care unites. Benchmark is the largest owner-operator of service-enhanced senior housing in New England.

background

Over the past two years, Sims has provided equity financing to assist Benchmark in re-capitalizing its portfolio of forty-three (43) senior living communities located throughout New England. As Benchmark’s partner, Sims was approached to provide equity for a new joint venture (the “Joint Venture”) that would partner with a publicly traded real-estate investment company to recapitalize nineteen (19) of Benchmark’s forty-three (43) communities.

challenge

In a transaction of this size and scope, the challenges were numerous; however, there were four (4) major obstacles. First, there was a very firm deadline to close the transaction by December 31, 2006; however, the details of transaction required to raise the necessary capital were not finalized until mid-December. Second, since the portfolio was currently held by a Sims-Benchmark joint venture entity, a tax-free exchange was proposed to postpone the payment of taxes. Third, Benchmark needed a long-term partner that could provide additional capital for future acquisitions and developments. And lastly, Sims was increasing its ownership in the Joint Venture to 60%, which required additional capital from the Sims entity.

implementation

Coachman Square at Woodbridge - Woodbridge, CT

This structure was attractive to Benchmark for several reasons: (i) the ability to meet the December 31, 2006 deadline; (ii) since the investment is made directly by a Sims-controlled entity, it allowed Benchmark to access to Sims’ extensive high net worth client base without having to deal with the individual investors; (iii) Benchmark wanted a long-term partner who would be able to provide additional capital as needed; the funding arrangement is open-ended so that additional capital can be raised for future acquisitions and developments; (iv) Sims’ willingness and ability to complete the asset exchange and defer taxes; and (v) the execution of the transaction was very efficient since Sims was able to complete all due diligence, underwriting and close within a very aggressive timeline.

result

Sims was able to meet all the challenges, while still meeting an aggressive timeline. The Joint Venture is the base onto which Benchmark expects to build a $2 billion portfolio of senior living communities.

Direct equity investments with excellent owner/operators such as Benchmark are the latest examples of Sims using its extensive client base to provide equity to senior housing providers. Sims excels in providing creative financing such as preferred equity, mezzanine debt or bridge financing which allow an owner or developer to complete a transaction.