The Capital Issue

Fall 2010

This edition of The Capital Issue includes an invitation to those overseeing nonprofit investment portfolios. New modeling available from Lancaster Pollard Investment Advisory Group lets you see how your own organization's investments would have performed had you been following various alternate spending policies. See "Spending Policy Rules: Which One is Right for You?" to contact President Bill Courson for a free comparison.

Other topics this quarter include an excellent example of the tangible results of hospital transparency, insights into master leases, and how to avoid costly borrowing mistakes. Special thanks to guest author Alysse Hollis of Peck Shaffer for explaining a lesser-known way of financing affordable housing projects.

If you have any questions on these topics or would like us to visit in person to explain them, please don't hesitate to contact us.

Thomas R. Green, CEO

The Biggest Mistakes Borrowers Make in Debt Financing
10/5/2010

The Biggest Mistakes Borrowers Make in Debt Financing

Finding financing is no passive activity. Many factors impact whether a project gets to the closing table, with some of the biggest having little to do with the markets or investors; they depend on the borrower’s decisions along the way. Altering a trajectory just slightly can send a financing strategy off course, resulting on potentially costly delays. So what could go wrong? And how to make sure it doesn’t?

The Bottom Line of Community Buy-In
10/4/2010

The Bottom Line of Community Buy-In

Several years of physician and community outreach have improved the transparency of Beatrice Community Hospital’s care delivery and finances, inviting more people to look in and directly contributing to an improved reputation and measureable savings.

Do Not Fear the Master Lease
10/3/2010

Do Not Fear the Master Lease

Financial market disruptions have become so common in recent years that it seems little, if anything, is left to report as “new.” The ongoing turmoil no longer grabs society’s attention from the front page. The seniors housing and care industry, however, is confronted with the issue daily and knows too well the continued difficulty in raising rationally priced debt and equity.

fha
S&P Stand-alone Rating Program Back in Spotlight
10/2/2010

S&P Stand-alone Rating Program Back in Spotlight

Over the past 18 months, as the market for tax-exempt multifamily housing bonds has struggled due to shortages of both traditional credit enhancement and equity capital, a decades-old program for unenhanced affordable housing transactions is gaining new life. The Standard & Poor’s (S&P) stand-alone rating program has come into the spotlight as a reliable source of refinancing and acquisition/rehabilitation monies.

Spending Policy Rules: Which One is Right for You?
10/1/2010

Spending Policy Rules: Which One is Right for You?

The traditional goals of an endowment are preservation (or growth), budgetary stability and intergenerational equity. Unfortunately, no spending policy can simultaneously maximize all three; each organization must implement a spending policy that best reflects these goals’ relative importance. The two major tradeoffs of any spending policy are stability vs. utility maximization and spending vs. portfolio growth. Utility, in this article, is the real value of spending plus the current portfolio value, which accounts for the differences in a dollar amount’s value over time.