United Health Services Hospitals Bank Financing
July 30, 2015
United Health Services Hospitals Inc. (“UHS”) is the leading provider of healthcare services in Binghamton, NY, offering a full range of integrated healthcare services to patients in the Triple Cities of New York.
UHS’s need was to finance a stand-alone, 69,000 square foot medical building that would largely be used to house orthopedics and related sports medicine services. In addition, UHS wanted to pay-off an existing FHA-insured mortgage loan, which was originally used to fund major improvements at UHS.
Cain Brothers served as Financial Advisor in connection with the private placement of Series 2015 $22.9 million new money variable rate tax-exempt bonds and a $10.5 million commercial loan facility used to refund UHS’s outstanding FHA debt.
Cain Brothers’ recommendations helped UHS to lower the cost of financing for the current transactions and established a Master Trust Indenture to facilitate future financings. The Series 2015 Bonds and commercial loan were both placed with a regional bank chosen through an RFP process conducted by Cain Brothers. The loans were issued as variable rate debt with the Series 2015 Bonds issued as “draw-down” bonds, allowing UHS to avoid significant negative arbitrage on the construction fund. UHS elected to hedge the interest rate risk with fixed payer swaps resulting in an all-in borrowing cost of 3.49% for the tax-exempt Series 2015 bonds and 4.21% for the taxable commercial loan. In addition to obtaining a low cost of funds, UHS was able to move from HUD dependent financing to a Master Trust Indenture structure that will enable them to more seamlessly access the capital markets for future needs.
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