ANGOLA, Ind. (May 14, 2013) – Cameron Memorial Community Hospital, a 25-bed critical access hospital in Angola, Ind., recently financed $47 million to build a replacement hospital, according to Steve Kennedy, senior vice president and regional manager with Lancaster Pollard, a national investment banking and mortgage banking firm headquartered in Columbus, Ohio. The firm was responsible for structuring and executing the financing.
"Lancaster Pollard assisted Cameron Memorial Community Hospital in obtaining funding at a low cost of capital," said Kennedy. "Because of the innovative combination of USDA Community Facilities direct and guaranteed loans for permanent funding, and tax-exempt BANs and a construction loan for construction financing, the hospital was able to fund a new replacement facility without reducing the project's scope."
Nearly 40 years old, Cameron Memorial's current facility had been renovated and expanded several times through the years, but was deemed outdated by modern medical standards. The hospital's leaders determined a replacement facility was the best option to provide safe and efficient delivery of health care to the community.
The project finance team, led by Lancaster Pollard, was able to obtain a USDA commitment for a $37 million direct loan at a fixed interest rate of 3.375% for 40 years as well as a commitment for $10 million of guaranteed loan funding for a total financing amount of $47 million project. Because the USDA Community Facilities program provides permanent financing, not construction financing, Lancaster Pollard suggested the sale of tax-exempt bond anticipation notes (BANs) to fund the majority of the building costs. Lancaster Pollard underwrote $37 million of BANs with a three-year term.
The remainder of the total $53 million construction funding (project costs and existing debt) came from $6 million in hospital equity and a $10 million construction loan from the community bank that is serving as the USDA Community Facilities guaranteed lender. The bank's construction loan will be paid off by the USDA Community Facilities guaranteed loan after construction is completed. The guaranteed loan will have a market-based interest rate and a 25-year term and amortization.
"The entire project team worked collaboratively to secure an extremely low interest rate and term-favorable financing," said Douglas Bomba, chief financial officer at Cameron Memorial Community Hospital. "It was a true team effort."
The new hospital will feature all private rooms with a "same-handed" design, where the layout of each room type will be exactly the same. This standardization will promote patient safety and staff efficiency. Also, the replacement facility will have three large operating rooms to accommodate additional surgical specialties and procedures, two outpatient procedure rooms, 12 private ambulatory surgery patient care rooms, a state-of-the-art radiology department, large community education rooms, a chapel and many other design improvements.
Lancaster Pollard helps health care, senior living and housing organizations expand and improve their services by providing financing solutions. The firm offers a full range of investment banking, mortgage banking and investment advisory services and has one of the largest groups of financial professionals dedicated to health care in the country. As a leading underwriter of bonds and mortgages, Lancaster Pollard has earned a reputation for delivering sound financial advice and the most cost-effective financing options available in the market.
For more information about the Cameron Memorial Community Hospital financing, visit www.lancasterpollard.com/hospital-financing.aspx.