Edenwald (February 2024)

HJ Sims Partners with Edenwald to Secure Predevelopment Financing for the First University Based Retirement Community in Maryland

Edenwald is looking to become the first true University Based Retirement Community in Maryland in partnership with Goucher College. HJ Sims understands the direction the community is going and has worked diligently to structure a financing that meets that goal and prepares to increase the size of the community by nearly 50%. The initial solicitation to financing partners was reviewed and presented to our Board with the understanding that this is a first step to a larger undertaking. HJ Sims sorted through the various concerns of the financial offerings presented to identify what would be the best fit in the long term. We look forward to the on-going assistance that they will provide both now and as the community evolves and appreciate all of their great work.”

– Roland deVasher, V.P. of Finance & Administration

Partnered Right®

The General German Aged People’s Home of Baltimore (“Edenwald”) is a not-for-profit senior living provider located in Towson, Maryland. The community consists of 262 independent living units, 32 assisted living units, 30 memory care units, and 49 skilled nursing units.

Over the past few years, Edenwald has been developing plans with nearby Goucher College to develop the first university-based retirement community (UBRC) in Maryland. The expansion project will ultimately include 127 independent living units and 25,000 square feet of new common space that will be used for intergenerational learning opportunities.

In early 2022 Edenwald ran a competitive RFP process to select an investment banking partner for the expansion project. Edenwald ultimately selected HJ Sims to assist with not only raising funds for the expansion financing, but also for the predevelopment costs associated with the expansion.

Structured Right®

Sims and Edenwald kicked off the predevelopment financing process in early 2023. After reviewing the various financing options, Edenwald elected to secure bank financing for funding the predevelopment costs. Bank debt represented a low cost of capital, prepayment capabilities, and the ability to draw down the debt over time to reduce interest expense. Sims prepared and broadly distributed a bank solicitation to banks located nationally and in the Mid-Atlantic. Despite the challenged commercial banking environment due to the recent collapse of Silicon Valley Bank (SVB), Edenwald received six term sheets for the predevelopment loan.

Sims negotiated the most competitive term sheets on behalf of Edenwald. Edenwald selected a proposal that had the lowest cost of capital, limited depository requirements that would not require the organization to change its banking relationships, and covenants that matched their existing bond documents.

Sims also reviewed several structural options for the loan, including utilizing taxable vs. tax-exempt debt, variable vs. hedged rates, and amortization/term structures. Given the size of the loan ($17 million), Edenwald initially thought a taxable bridge loan would be cost effective due to the lower issuance costs and the ability to close on the loan quickly. However, after developing a quantitative analysis, Sims found that the tax-exempt structure produced a lower overall cost despite the higher costs of issuance. Further, Edenwald elected to leave the loan unhedged due to the expectation of future rate cuts by the Federal Reserve and the potential for a swap termination expense if the loan were repaid at permanent financing. Sims also structured the loan to have a seven-year term and a 27-year amortization after 3 years of interest only so that the loan could potentially remain outstanding during permanent financing. This structure would provide Edenwald the option to repay the loan at permanent financing or from initial entrance fees from the expansion. Lastly, Edenwald elected to capitalize interest for 36 months so that they did not have to come out of pocket for interest expense during the predevelopment stage.

Executed Right®

Simultaneously with the bank solicitation process, Edenwald was negotiating the lease with Goucher for the expansion’s land. The lease negotiation process was slightly delayed over the summer and was finalized in the fall of 2023. At that time Sims reconnected with the selected bank and requested a refreshed term sheet to be executed. Due to the changes in the commercial banking sector in the wake of SVB’s collapse as well as internal changes at the bank, the refreshed proposal was no longer competitive with the proposals Edenwald received earlier in the year.

Sims requested a revised proposal from Fulton Bank, the next most competitive proposal and Edenwald’s existing banking partner. Fulton’s refreshed proposal did not include any substantial differences from the original proposal despite the significant change in the banking environment. Based on the revised proposal, Edenwald selected Fulton Bank to provide the predevelopment loan due to the competitive cost of capital, limited changes to existing covenants, and the ability to keep the loan outstanding through permanent financing.

Financed Right®

With Fulton Bank selected, Sims and Edenwald pulled together the working group and began the issuer approval process with the Maryland Health and Higher Educational Facilities Authority (MHHEFA). Three months after kicking off the financing, Edenwald and Fulton Bank closed on the $17 million predevelopment financing on February 29, 2024. Over the next two to three years, Edenwald and Goucher College will work to secure entitlements, presales, and a GMP contract to secure permanent financing.

For more information, please contact:

Aaron Rulnick


David Saustad


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