‘Kicking Themselves’
Other hospitals in Maryland include provisions in their bond documents allowing them to pledge accounts receivable to new loans, said Bruce Ritchie, chief financial officer at Peninsula. Debt secured by receivables can’t exceed 25 percent of total claims for payment.
The deal was five to six times oversubscribed, Ritchie said. “There was appetite for our bond issue in the market with the covenants written the way they were written.”
In Boca Raton, Florida, a startup retirement community borrowed $190 million in unrated bonds last year without having final building permits from the county.
Construction on the Sinai Residence, a 237-unit continuing care retirement community that will feature rooftop gardens and a spa, is about 65 percent complete, said Mel Lowell, chief operating officer of the Jewish Federation of South Palm Beach County. The units are sold out and there’s a waiting list.
The project had a letter from officials giving conditional approval for the permits if minor items were addressed, Lowell said. Thirty-five-year bonds that were sold at 98.5 cents on the dollar traded at an average of 112 cents on Wednesday.
Investors who balked at the bonds are “kicking themselves in the tuchas now,” said Lowell, using the Yiddish word for rear end.