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Long Term Acute Care
Select Medical is a provider of long-term acute care and has a longstanding
relationship
with Alegent Hospital, leasing acute care beds to Select in two of its
existing hospitals.
However, Alegent was faced with a dilemma. Beds that it had
previously leased to Select
for acute care purposes needed to be returned to
Alegent for its own growing population,
and Alegent did not want to jeopardize
its current relationship with Select. Alegent
ultimately decided to construct a
new freestanding 56-bed LTAC facility, designed for
direct connection to Alegent’s centrally located hospital on its Bergan Mercy campus.
Alegent soon realized, however, that the cost and capital requirements for the new facility
would place a strain on their hospital systems’ other project needs. Adding to the financial
complexity, Select Medical required that the lease be structured as an operating lease to
avoid any negative impact on their borrowing capacity. Alegent also added a challenge,
hospital covenants did not allow them to sell their land, thus the project would need to
be structured with a ground lease.
Alegent indentified the Granger Group as a developer with both the developmental
experience and financial capability to deliver a superb facility at a cost effective
lease rate.
The Granger Group redesigned and re-engineered the property to a
cost effective solution
while maintaining the building scope and key building
systems. The Granger Group then
secured off-balance-sheet financing within the project’s constraints that allowed both
Alegent and Select to preserve their capital and begin lease payments only after the
facility was open for business.
