​Eligible Properties

Proposed new construction, acquisition with substantial rehabilitation/modernization & refinances with substantial rehabilitation/modernization of existing hospital facilities.

A.The program defines a hospital facility as one:

1) That provides community service for inpatient medical care of the sick and injured;
 

2) Which has not more than 50% of the total patient days during any year assigned to the categories of chronic convalescence and rest, drug and alcoholic, epileptic, nervous and mental, mental deficiency and tuberculosis, and;
 

3) Which is a proprietary facility, or facility of a private nonprofit corporation or association, licenses or regulated by the State.

B. A minimum of 20% of the mortgage amount must be for new construction, rehabilitation or modernization (1/2 of the percentage for construction/rehabilitation can be used for equipment purchase). This program may not be used for straight refinancing.

C. Certificate of Need (CON) requirements. Eligible projects must have a CON issued by a State Agency. If there is no CON process in the project state, the State must commission or conduct an independent feasibility study, paid for by the hospital or from mortgage proceeds. This is not required for Critical Access Hospitals.

D. Financial Data. For existing properties, over the past three full fiscal years, the average operating margin for the hospital must have been equal to or greater than 0.00, and the average debt service coverage ratio equal to or greater than 1.25.

E. Group Practice. The law provides that encouragement shall be given to group practice sponsors seeking mortgage insurance for hospitals as defined above.
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Recourse

Non-recourse during both construction & permanent phases of

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Loan Amount

Financing no limits

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Maximum Mortgage Limits

The lesser of:
a) 90% replacement cost or value
b) 1.25 DSCR Sub-Rehab / 1.40 DSCR for New Construction

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Interest Rate

Fixed rate determined by market conditions at the time of rate lock

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Amortization & Term

Interest only during the construction period, plus 25 years fully amortizing

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Escrows

Escrows for taxes, insurance, replacement reserves & mortgage insurance premium are required

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Initial Operating Deficit

The facility will be underwritten with an initial operating deficit escrow to cover the debt service payments during typically the first twelve to eighteen months of the loan. This may be satisfied in the form of cash or letter of credit.

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Mortgage Reserve Fund

This escrow is required to be built up to an amount equal to one year’s debt service after five years, and two years’ debt service after ten years

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Working Capital Escrow

For proprietary projects only. A 2% working capital deposit is established by the borrower at initial endorsement in the form of cash or a letter of credit.
 

​Non-Profit Developers Fee

For non-profit projects only. This fund is primarily used as a working capital escrow for accruals during the course of construction for mortgage insurance premiums, taxes, ground rents, property insurance premiums and assessments, when other funds available for these purposes have been exhausted.

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Mortgage Insurance Premium

.70% of the loan amount per year of the anticipated construction period capitalized at closing. Thereafter, .70% of the outstanding loan balance paid with monthly principal and interest payments.

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Prepayment Terms

To be determined

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Security

The loan shall be secured by a first mortgage on the entire hospital, including all real estate and improvements.

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Federal Labor Standards

Federal prevailing wage & reporting requirements

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Secondary Financing

Permitted under certain conditions at closing

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Assurance Of Completion

Payment & performance bond or cash

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Financing Fees

Deposit/LOC Fees negotiable
 

​HUD Application Fee

$1.50 per $1,000 of requested mortgage due at loan application

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HUD Commitment Fee

$1.50 per $1,000 of requested mortgage, due at the issuance of the loan commitment

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HUD Inspection Fee

$5 per $1,000 of requested mortgage amount at closing, to cover the physical inspection of the property

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Good Faith Deposit

$10,000 due at acceptance of Engagement Letter; non- refundable

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Third Party Expense Deposit

Estimated at $150,000 for feasibility study (approx. $125,000 of the total), appraisal & environmental reports
 

​Legal/Closing Fees

Estimated to be $50,000 payable to Alliant Capital LLC’s Closing Counsel at Final Endorsement from loan proceeds

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HUD/Review Time

120 – 150 days

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​Fast Track Processing

Available to financially strong hospitals