Friends House: An Exclusive Investment Opportunity

$17,120,000*
MONTGOMERY COUNTY, MARYLAND
Economic Development Revenue Bonds
(Friends House Retirement Community Project)
Series 2018A

HJ Sims is pleased to serve as underwriter for the upcoming issue of these non-rated, tax-exempt economic development revenue bonds for Friends House Retirement Community (Friends House), a not-for-profit, 501(c)(3) organization that operates a continuing care retirement community (CCRC), in Sandy Spring, Maryland. Friends House provides housing, healthcare, and other related services to residents on a campus of 208 units, comprised of independent living, assisted living, and skilled nursing units. Since 1967, Friends House has operated Independent Living Cottages and Apartments and Low-Income Housing. The licensed Health Care Facility and Assisted Living offerings were introduced in 1972 and 2005, respectively.

About the Bonds

  • Non-rated
  • Tax-exempt
  • Use of Proceeds: Renovate and expand Friends House’s existing commons building demolish and remove vacant independent living cottages; construct, furnish and equip new 14 independent living cottage units and 33 new independent living apartment units; complete other associated site work and development; pay a portion of the interest on the Series 2018A Bonds during construction; fund a Debt Service Reserve Fund for the benefit of the Series 2018A Bonds; and pay certain costs of issuance of the Series 2018A Bonds.
  • Denominations: $100,000 or any $5,000 increment in excess thereof
  • First Interest Payment: January 1, 2019, payable semi-annually on January 1 and July 1 thereafter
  • Final Maturity: July 1, 2048

Security:

  • The Series 2018A Bonds will be secured on a parity basis with $13,200,000 Series 2018B Bonds that will be issued simultaneously with the Series 2018A Bonds and that will be directly purchased by Compass Mortgage Corporation
  • A security interest in all assets of the Obligated Group
  • A security interest in the Gross Revenues of the Obligated Group
  • A security interest in the funds established under the Master Indenture
  • A lien on the real property constituting the Land and the Facilities and other personal property of the Obligor as described in the Deed of Trust

Key Financial Covenants:

  • Debt Service Coverage Covenant: Debt Service Coverage Ratio of 1.20x, Tested Annually, commencing with the earlier of June 30, 2024 or the first full Fiscal Year following the achievement of Stable Occupancy; an Event of Default shall take place if the Obligated Group fails to maintain either a Debt Service Coverage Ratio of at least 1.00 for two consecutive Fiscal Years or a Debt Service Coverage Ratio of at least 1.00 for any Fiscal Year and Days’ Cash on Hand at the end of such Fiscal Year is less than 150
  • Liquidity Covenant: Tested semi-annually, each June 30 and December 31, commencing December 31, 2018; no less than 75 Days’ Cash on Hand commencing December 31, 2018 through December 31, 2019; no less than 100 Days’ Cash on Hand thereafter

We are currently accepting indications of interest for these non-rated, tax-exempt economic development revenue bonds with an expected pricing week of August 6, 2018 and anticipated settlement August 23, 2018. For more information including risks, please read the Preliminary Official Statement in its entirety. If you have interest in purchasing these Series 2018A bonds from this new issue, please contact your HJ Sims financial advisor as soon as possible or call 888.881.5393.

*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 Friends House.
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