Organizations that know what to expect going into a financing can make better decisions and move faster on their projects. This page offers preliminary information in broad terms designed to introduce you to what will happen during the debt financing process when you work with Lancaster Pollard.
If ever you have a question about how your financing is proceeding, or you would like additional clarification to help you make a decision, please know that we are glad to walk through any questions with you.
What Comes First?
Our 20 years of experience with health care clients has taught us a key lesson: it’s better to involve Lancaster Pollard as early in the project as possible. Yes, we provide financing, whether by underwriting tax-exempt bonds or a mortgage loan, whether credit-enhanced or unenhanced, whether we use HUD, USDA or Fannie Mae – or not. But we also prefer to be involved early as a financial adviser so that we can provide a framework for determining an organization’s debt capacity and potential funding structures.
Because Lancaster Pollard brings such a variety of funding structures to the table, we want to perform thorough due diligence on the structure that makes the most sense for each individual organization and each individual project.
What to Prepare
Lancaster Pollard takes responsibility for assessing and articulating your “credit profile.” Utilizing both qualitative and quantitative factors and a depth of experience we have built over the past 20 years, we develop a complete written credit profile that leads to a better understanding of your organization, resulting in improved risk-based pricing and more favorable terms. To accomplish this, we request information at the beginning of the engagement in order to identify both strengths and weaknesses.
| Examples of information that may be requested: |
| Organization history/services Investment portfolio statement Utilization/occupancy reports Market share/marketing plans
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During the Process
Lancaster Pollard serves as the guide to help you determine how much your organization can afford to borrow, and what financing option would be the most efficient for your specific goals, both immediate and long term. We also coordinate the relationships among the many players on your team, including attorneys, architects and contractors, any banks, rating agencies or other credit enhancement providers, federal agencies (when applicable) and bond trustees.
Lancaster Pollard will explain all available financing structures, and the pros and cons of each. Some of these options can be combined with one another to create a custom structure; for example, maybe a combination of fixed-rate and variable-rate debt would provide the ability to better hedge against investment portfolio fluctuations. Perhaps your plans for a future project necessitate a more flexible financing structure. Lancaster Pollard has built its service platform to provide financing options to meet these needs.
Lancaster Pollard may recommend “multi-tracking” your financing. This means we will analyze and start down the path of multiple financing options at once. The reason for this approach has been validated by the extreme volatility of capital markets since late 2007. Markets will continue to fluctuate as your project proceeds. Sometimes these market shifts can make your initial financing preference less desirable, or can make a secondary option suddenly more attractive. By multi-tracking the transaction, we have preserved flexibility until the market dictates the best choice.
We ultimately provide the actual financing regardless of structure. As an independent underwriter, we are able to help you negotiate debt covenants with investors or credit enhancers. We always shoulder the burden of all HUD, Fannie Mae or USDA application processes.
New Debt, New Responsibilities
You will have to incorporate new or restructured debt into your spending and investment policies. Debt and assets cannot be looked at through separate windows. For nonprofit organizations, Lancaster Pollard Investment Advisory Group can assist in evaluating and monitoring investments and overall balance sheet risk, and can also help nonprofits invest any short-term project funds.
Lancaster Pollard will help you understand all debt covenants and key deadlines following your financing, such as those for renewing a letter of credit. We will also continue to monitor the markets in relation to your debt and keep you abreast of any relevant issues.
