Joint Venture-Skilled Care & Assisted Living Facility-Georgia.

[Charlie Claxton]

Hey Bigger Pockets,

I am writing because I was hoping that someone could steer me in the right direction on a development my family and another Savannah family are working on. We are in the process of developing a12.6mil,  68 bed skilled care/ Assisted living facility in South Georgia. The town where the project is located has agreed to issue revenue bonds to finance the construction of the facility. We are building an green version of the "Eden Alternative" kind of housing, where our residents live in small clusters of small private rooms (baths) gathered around common living and eating space. This has proven to be a much healthier way of our senior citizens to live out their golden years as opposed to going to a facility to wait to pass.

Up until two weeks ago we were planning to use the USDA to guarantee the bonds. But we recently found out that it would take at least six months to gain this guarantee. Which would put our plan drastically behind schedule in terms of construction and the operator's schedule. This isn't something that we can deal with.

Our bond council and underwriter (top 5 firms) suggested that we gather a group of private investors to back the bonds through the construction and fill up period (first 18 months). After the first 18 months, the guarantee expires. The way we see it, the facility will be fully bonded against construction overruns and problems due to the construction bond from construction firm, and the project has a two year capital reserve account from the bond proceeds- So we see the private bond guarantee as relatively protected. 

So we are offering 20% equity in the facility to the backer, and offering 2%-5% to the securing party (our banker thinks she has a short list of partners here in Atlanta, but she will of course want something privately for her services in the deal).

My question to the BP community is , how would you guys pitch this to the other families that are interested in backing the bonds with us? Obviously the project has all of the usual plans, sketches, profit statements, etc- But our bond guy says that he likes the deal and it should be an easy sale, I am more interested how this deal should be approached?? I think the financing deal we have worked out with the city is too wonderful to let a timing issue mess with. Would love to hear everyone's thoughts. All advice welcome.