Front Porch Series 2021A and 2021B

25 Aug

Case studies

Front Porch Series 2021A and 2021B

Pricing Date: August 19, 2021

Closing Date: September 9, 2021

$199,000,000 Series 2021A Tax-Exempt Fixed Rate Bonds

$107,000,000 Series 2021B Taxable Fixed Rate Bonds


Front Porch Communities and Services (“Front Porch”) acquired Covia Group (“Covia”) in April 2021 and sought to consolidate outstanding debt into one obligated group and Master Trust Indenture with the 2021 financing. In addition, Front Porch elected to improve its risk-adjusted cost of capital by taking advantage of economies of scale and refinancing outstanding bank debt and restrictive HUD-insured debt.


  1. Maintain Front Porch’s strong credit ratings and revert S&P’s Negative outlook (April 2021), which reflected pandemic impact
  2. Given Front Porch’s credit strength, market the organization in line with ‘A’ category healthcare peers vs. other senior living organizations
  3. Weak market tone and President Biden’s vaccine mandate for federally funded nursing home staff created uncertainty the day prior to pricing
  4. A preference for fixed rate debt and relatively steep MMD curve challenged thinking on structuring long-term bonds to maintain a low cost of capital


  1. Ratings: Both S&P and Fitch affirmed ratings and assigned stable outlooks to Front Porch given past performance and expectations of strength post-acquisition
  2. Security: The bonds were sold with a streamlined and flexible security structure in line with ‘A’ rated healthcare credits, including no liquidity covenant and updated rate covenant with a 2-year EOD provision
  3. Fixed Rate Savings: Refunding Covia’s fixed rate debt produced NPV savings over $35 million and annual cash flow savings ~$2.7 million. Additionally, Front Porch refinanced ~$90 million HUD-insured debt to eliminate administrative burdens while also producing savings. The taxable all-in TIC of 2.37% compares favorably to the HUD debt cost of ~3.20%
  4. Pricing Results: Ponder worked with management and the banking team to advocate for low coupon bonds to reduce the overall TIC of the issue, including $64 million of 3% coupon bonds and $25 million of unique 2.50% coupon bonds. Overall, Front Porch secured a cost of capital of 2.69% (all-in TIC) on the transaction

About Front Porch: ‘A-/A’ (S&P / Fitch)

Front Porch is a California nonprofit corporation incorporated in 1995 that provides housing and services to residents of its senior living and active adult communities and affordable housing. On April 1, 2021, Front Porch acquired Covia Group which expanded operations in Northern California and made Front Porch one of the largest not for profit senior living providers in the United States.

Pricing Results:

Front Porch Series 2021 pricing results

Comparable Bond Sales:

Front Porch Series 2021 comparable bond deals