Second hospital in a month closes on HUD financing through Lancaster Pollard

COLUMBUS, Ohio (Dec. 30, 2008) - Lancaster Pollard has closed on a $19.3 million financing to replace Carlinville Area Hospital in Illinois. Strong community support combined with federal mortgage insurance from the Department of Housing and Urban Development made the much-needed new building affordable despite the turmoil in the credit markets.


"HUD remains a strong option for financing - for some, it's the only choice," Lancaster Pollard CEO Thomas R. Green said. "Federal mortgage insurance isn't a guarantee that bonds will get sold in this market, but selective investors still favor HUD over other options."


Carlinville's existing 25-bed Critical Access Hospital main building was built in 1952. Designed for inpatient services, the aged facility complicated delivery of modern outpatient care and lacked the space for some types of newer equipment. Labs and radiology, for example, were located far from the emergency department and surgery. Admissions had fallen in recent years, and with several physicians nearing retirement, Carlinville needed to make drastic upgrades to continue to provide strong services and attract staff.


It would have taken over four years to renovate in phases, CEO Kenneth Reid said. Lancaster Pollard investigated several private financing options as well as HUD/FHA Section 242 mortgage insurance, and underwrote the transaction as a taxable deal to save Carlinville the considerable up-front expense required by tax-exempt Section 242 transactions, which demand a collateral escrow account and debt service reserve fund at closing.  Additionally, the taxable loan allows for draws during construction, enabling the hospital to avoid having to fund significant negative arbitrage given the steep yield curve.  The financing is supplemented by over $8 million in community support.


The new 25-bed facility will feature all private rooms and electronic data systems. Space for several specialty clinics will allow local delivery of more services, and modern surgery suites are anticipated to increase the number and type of surgeries that can be performed. The new facility is scheduled to open in 2010 and will continue to be managed by BRIM Healthcare, which turned around Carlinville Area Hospital's operations when it took over in 2002. The hospital received Critical Access Hospital designation in 2005.


In November, Lancaster Pollard closed on a $16.75 million Section 242 financing for Fall River Hospital in South Dakota. Eight hospitals received hospital mortgage insurance commitments in HUD fiscal year 2008, and interest in the program continues to grow because of the frozen credit markets. HUD completed 30 preliminary reviews for the program in fiscal year 2008, more than fiscal years 2006 and 2007 combined.


 About Lancaster Pollard

Lancaster Pollard Holdings, Inc. helps health care, senior living, affordable housing and private education organizations expand and improve their services by providing financial advice and financing solutions. The firm offers a full range of investment banking, financial advisory, mortgage banking and investment advisory services. 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.


Headquartered in Columbus, Ohio, Lancaster Pollard consists of three affiliated companies and has regional offices in Atlanta, Austin, Denver, Kansas City and New York. Lancaster Pollard & Co. underwrites debt securities and is a registered broker/dealer with the Securities and Exchange Commission (SEC) and a member in good standing of the Financial Industry Regulatory Authority (FINRA), Municipal Securities Rulemaking Board (MSRB) and Securities Investor Protection Corporation (SIPC). Lancaster Pollard Mortgage Company provides mortgage insurance to support capital funding initiatives through government agencies, including the Federal Housing Administration (FHA), Federal National Mortgage Association (Fannie Mae or FNMA), Government National Mortgage Association (GNMA) and U.S. Department of Agriculture (USDA) and is a U.S. Department of Housing and Urban Development Multifamily Accelerated Process (MAP) lender. Lancaster Pollard Investment Advisory Group, an SEC-registered investment advisor, helps nonprofit organizations create the financial means to last the life of their missions by managing total financial risk rather than just investment-associated risk.