Beatitudes: Investment Opportunity

$20,335,000*
The Industrial Development Authority of the City of Glendale, Arizona
Revenue Bonds
(The Beatitudes Campus Project)
Series 2018

HJ Sims is pleased to serve as co-managing underwriter for the upcoming issue of these non-rated, tax-exempt revenue bonds for Beatitudes Campus (Beatitudes), a non-profit Continuing Care Retirement Community (CCRC), located in north central Phoenix, Arizona. Opened in 1965, Beatitudes now consists of a total of 651 residences/beds, including 188 entrance fee independent living apartments, 11 entrance fee independent living patio homes, 259 rental independent living apartments, 92 traditional assisted living units, 29 early stage memory care assisted living beds and 72 skilled nursing beds.

Financing Management

  • Senior Managing Book-Running Underwriter: Ziegler Capital Markets, responsible for structuring the transaction, 65% Liability
  • Co-Managing Underwriter: BB&T Capital Markets, added to the transaction team to assist with the distribution of the new issue, 25% Liability
  • Co-Managing Underwriter: HJ Sims, added to the transaction team to assist with the distribution of the new issue, 10% LiabilityNon-rated

About the Bonds

  • Tax-exempt
  • Use of Proceeds: to finance the acquisition, construction and equipping of 34 new independent living patio-homes; improvement of campus
  • Denominations: $5,000 or any integral multiple thereof
  • First Interest Payment Date: May 15, 2019, payable semi-annually on May 15 and November 15, thereafter
  • Final Maturity: Series 2018 Bonds: November 15, 2053

Security

  • Security for the Series 2018 Bonds will consist of a gross revenue pledge, a first mortgage lien on and security in the fixed assets and debt service reserve fund. The reserve fund will be held at the Master Trustee and will be a combined reserve fund for the Series 2018 and any future bonds. If a majority of the Series 2017 bondholders consent, the existing 2017 reserve fund balance will be transferred to the Master Trustee and those bonds will become DSRF Bonds.

Key Financial Covenants

  • Debt Service Coverage Covenant (Annual): Actual annual debt service coverage ratio of 1.20x or greater; event of default if debt service coverage ratio is less than 1.00x for any fiscal year and days cash on hand is below 250, or debt service coverage ratio is less than 1.00x for two consecutive fiscal years
  • Limitations on additional indebtedness
  • Asset transfers – 3% of total assets if in compliance with covenants; step-ups with higher liquidity
  • Standard quarterly and annual reporting, including financial and occupancy information
  • Participation in ongoing disclosure call program

Days Cash on Hand Covenant (Semi-annual)

  • 65 days beginning with the initial testing date of March 31, 2018
  • 80 days as of September 30, 2019
  • 95 days as of September 30, 2020
  • 110 days as of September 30, 2021
  • 125 days as of September 30, 2022 and thereafter

We are currently accepting indications of interest for these tax-exempt, non-rated revenue bonds with an expected pricing date during the week of September 24, 2018, and anticipated settlement date October 11, 2018. For more information including risks, please read the Preliminary Official Statement in its entirety.  If you have interest in purchasing Bonds in the new issue, please contact your HJ Sims financial advisor as soon as possible or call 877-577-3365. *Subject to change

No dealer, broker, salesperson, or other person has been authorized to give any information or to make any representation other than those contained in the Preliminary Official Statement, and, if given or made, such other information or representation should not be relied upon as having been authorized by the Issuer, the Borrower, or the Underwriters. The information set forth herein has been obtained from the Issuer, Borrower, and other sources that are believed to be reliable, but is not guaranteed as to accuracy or completeness by, and is not construed as a representation of, the Underwriters. The information contained herein is subject to change without notice. Under no circumstances shall this constitute an offer to sell or solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Any offering or solicitation will be made only to investors pursuant to the Preliminary Official Statement, which should be read in its entirety. Investments involve risk including the possible loss of principal. HJ Sims is a member of FINRA and SIPC, and is not affiliated with Beatitudes.
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