Montefiore Raises Nearly $1.2B in Bond Financing
The bonds will be used to refinance certain existing debt and to provide reimbursement for certain strategic investments, enabling Montefiore to exit the Federal Housing Administration’s mortgage insurance program, according to DASNY.
NEW YORK CITY—Montefiore Health System has raised a total of $1.17 billion in the bond market, including $685 billion in bonds issued through the Dormitory Authority of the State of New York.
The Montefiore Obligated Group issued the bonds through DASNY in a financing led by the Bank of America Merrill Lynch. The $685 million issued by DASNY was offered as a $309 million tax-exempt series and a $376 million taxable series. In addition, Montefiore issued $482 million in bonds on its own.
The bonds will be used to refinance certain existing debt and to provide reimbursement for certain strategic investments, enabling Montefiore to exit the Federal Housing Administration’s mortgage insurance program, according to DASNY. The bonds were rated BBB by Standard & Poor’s and Baa2 by Moody’s. ACA Financial Guaranty Corp. provided bond insurance on a portion of the bonds. This is Montefiore’s inaugural bond issue based on its own investment grade bond rating.
Montefiore utilized a hybrid tax-exempt/taxable financing structure through DASNY that allowed Montefiore’s financing to be structured to appeal to the greatest range of investors. Montefiore chose these financing vehicles to tap additional capital and implement a flexible financial structure that supports Montefiore’s growth, DASNY officials state.
“By offering a hybrid tax-exempt/taxable financing structure, we are better able to deliver for our clients when they head to the market,” says DASNY president and CEO Dr. Gerrard P. Bushell. “Through our internal One DASNY initiative, we have modernized our processes, enabling DASNY to serve our clients with greater flexibility and quicker execution of their financial transactions.”
Last month, Moody’s Investors Service in assigning the Baa2 rating to Montefiore Obligated Group’s approximately $1.2 billion in bonds, stated that the rating reflects Moody’s belief that the Montefiore Health System “will maintain a leading market position in the Bronx, supported by its clinical excellence and its flagship’s position as the primary teaching hospital for the Albert Einstein College of Medicine.” Moody’s added that the rating also reflects Montefiore’s experience with value-based contracting that will be aided by integration with its large base of faculty practice and primary care physicians.
In May, Simone Healthcare Development, a division of Simone Development Companies, announced that Montefiore Health System was expanding its lease at the Hutchinson Metro Center in the Bronx.
The long-term expansion lease was for 90,000 additional square feet at Tower One of Hutchinson Metro Center (1250 Waters Place in the Bronx) and 6,500 square feet at the nearby Metro Center Atrium. With the new lease, Montefiore now occupies a total of 453,000 square feet at Hutch Metro Center.