Our Technique
Our Technique
We specialize in meeting the major capital financing needs of non-profit healthcare institutions by privately placing their tax-exempt revenue notes with commercial banks. This decidedly non-traditional approach to tax-exempt financing differs in many respects from a more traditionally-structured bond issue, and offers several advantages.
- Lower marketing costs, and a simpler deal structure lead to lower total fees and costs to close your financing.
- The debt service reserve fund which increases the size of a traditionally-structured bond issue by up to ten percent is not needed.
- We typically eliminate the losses which would otherwise occur in the construction escrow associated with a traditionally-structured bond issue.
- These factors significantly reduce the amount of financing required to support your project.
- In many markets, a well-tailored adjustable-rate structure offers a lower interest cost than is generally available under a traditionally-structured, fixed-rate bond issue.
- Covenants and additional debt provisions generally parallel those typical under traditionally-structured bond issues. However, superior prepayment rights and the presence of a single lender (or a compact lending group) at the other end of the financing afford you a higher level of actual flexibility than under a broadly-distributed bond issue administered by a trustee and call-protected for up to the first ten years.
- The absence of unsophisticated individual investors further reduces potential legal issues and liability concerns for both the borrower and the public entity which issues the financing.
- The financing requires less of hospital management’s time, both initially and over the term. There is no official statement, and no continuing disclosure agreement.
- Our approach allows you to work with local and regional lenders, some of whom you probably already know, within a financing structure that supports the relationship between borrower and lender in a manner which is simpler and more natural than would be possible through a traditionally-underwritten and trusteed bond issue.
We can work with you to adapt our placement approach to your preferences and to local conditions, leaning either toward a broad, competitive distribution or toward building a cooperative local lending consortium. Either way, our expertise, experience, and understanding of this market allow us to deliver you the low total cost and custom tailoring available through this hybrid financing approach.