Lancaster Pollard recently closed on a $32-million financing with St. John’s Lutheran Hospital, a 25-bed critical-access hospital (CAH) in Libby, Mont., for replacement of its 60-year-old facility. The two-story, 79,000-square-foot new hospital will be constructed next to the existing hospital campus.
Located in South Lincoln County in Northwest Montana, St. John’s Lutheran Hospital provides services to the community, including: orthopedic and general surgery, urology, obstetrics and gynecology, MRI and CT, mammography, nuclear medicine, ultrasound, laboratory, emergency and urgent care, cardiac and pulmonary rehabilitation, chemotherapy, home health, hospice and physical and occupational therapies. Constructed in 1952, the existing hospital building has become inefficient and obsolete and is no longer ideally situated to provide the inpatient and outpatient treatments that patients demand from modern health-care providers. The new facility will allow St. John’s Lutheran the ability to provide needed health-care services to the area for decades to come as well as to aid the hospital in physician and nurse recruitment.
Lancaster Pollard, a national investment banking and mortgage banking firm headquartered in Columbus, Ohio, was engaged to evaluate a number of financing structures for the hospital’s construction project. Based on favorable market conditions, Lancaster Pollard ultimately underwrote the project using a taxable fixed-rate mortgage note insured by the FHA Sec. 242 program, allowing the hospital to obtain a 25-year, low fixed-rate interest loan that provides both construction and permanent financing. The structure provided considerable closing-cost savings, elimination of negative arbitrage and the ability to retain liquidity, contrasted to a conventional tax-exempt bond structure.
“The demand for a new hospital became apparent as advancements in health-care delivery have stretched our current facility to its limits both in space and physical plant,” said Bruce Whitfield, St. John’s Lutheran’s chief executive officer. “The FHA loan offered our hospital interest rates and terms similar to those afforded AA-rated health-care organizations in the bond market. Lancaster Pollard was instrumental in our loan process from start to finish and we were heavily dependent on their expertise to get the loan approved by HUD.”
Matt Lindsay, a vice president at Lancaster Pollard who worked with St. John’s Lutheran Hospital’s board and leadership team in securing financing for the replacement facility, said “St. John’s Lutheran Hospital plays a vital role in providing needed health care to the people of Montana’s South Lincoln County. This completed financing will help to make a long-awaited capital project a reality for the community.”
In addition to providing a new hospital facility, the project will create about 110 construction jobs with millions of dollars of construction wages staying in the local economy, according to Lindsay. Additionally, more than $500,000 of economic impact will be realized by local merchants.
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