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SEN-110211 11.28.11
RED Serves as Financial Advisor on the First USDA Community Facilities Hospital Replacement in the State of Washington
Mark Reed Health Care District to Build New Facility in Elma, WA
COLUMBUS, OH – Red Capital Markets, LLC (MEMBER FINRA/SIPC), the investment banking arm of comprehensive capital provider RED CAPITAL GROUP, LLC, served as financial advisor to the Mark Reed Health Care District (“Mark Reed”) to help it secure financing to construct a 10-bed replacement hospital facility. Mark Reed is a public hospital district currently located in McCleary, Washington, approximately 40 miles west of Olympia.
As a part of the project, Mark Reed will move its hospital facility 7 miles west to Elma, Washington and will continue to provide primary care and diagnostic services in its McCleary location. The new facility will replace one that was built in the 1950’s and will be located on a new site to allow for easier access by residents of East Grays Harbor County.
Mark Reed Health Care District, Elma, WA
Mark Reed turned to Red Capital Markets, LLC as a financial advisor to review finance options and craft a creative plan of finance for the project. As a public hospital district in the State of Washington, Mark Reed has the ability to ask its residents to approve property taxes to finance facility improvement projects. Over the past decade, however, Mark Reed was unsuccessful in obtaining voter approval for additional property taxes to issue general obligation bonds to finance a replacement facility. After reviewing market conditions and possible financing structures, Red ultimately guided Mark Reed through the USDA Community Facilities Program to secure a commitment from the USDA to purchase $19.01 million in fixed-rate bonds from Mark Reed. This marks the first hospital replacement project in the State of Washington financed through the USDA Community Facilities program.
The USDA Community Facilities Program enabled the hospital to control its architectural and engineering expenses early in the project and to obtain a very low fixed-rate cost of long-term capital. Under Red’s guidance, the hospital submitted schematic designs with its application, rather than more costly construction drawings during the initial application phase. Once the hospital received a commitment from the USDA for financing, Mark Reed accelerated its architectural efforts and completed construction drawings nine months after its commitment. The financing was structured in two series of bonds -- $9.5 million in General Obligation Bonds and $9.5 million of Revenue Bonds – both with a 3.75% fixed interest rate and a 30-year final maturity. Proceeds from the bonds and hospital equity will be used for land acquisition, equipment purchases and construction of a $22 million replacement 10-bed hospital facility.
Red Capital Markets, LLC’s lead banker Jeffrey C. Fivecoat said, “It was a pleasure working with Renée Jensen and the Mark Reed team on the first USDA Community Facilities financing for a new hospital in the State of Washington. We are pleased we were able to structure their bond issues to provide capital at very attractive, low rates to build this much needed facility. To end up with a 3.75% fixed rate for 30 years is truly a great outcome for a community hospital.”
Renée Jensen, Chief Executive Officer of Mark Reed added, “Red’s knowledge and expertise in health care financing allowed us to secure a highly efficient capital structure for our replacement project. They listened to our needs, responded to our questions and delivered under very tight timelines. As a result, Mark Reed will soon have a new state-of-the-art healthcare facility to care for our patients and continue to serve the health needs of our community for many years to come. It has been a wonderful experience working with Red as our financing partner.”
For more information, contact:
RED CAPITAL GROUP
Linda L. Mackov,
Senior Managing Director
(614) 857-1404
llmackov@redcapitalgroup.com
For more information on this transaction,
please contact:
Red Capital Markets, LLC
Jeffrey C. Fivecoat
Vice President
Columbus, OH
(614) 857-3159
jcfivecoat@redcapitalgroup.com
