The Capital Issue

October-November 2013

As we publish this newsletter, we all can breathe a sigh of relief.

Interest rates on the 10-year Treasury took a dip at beginning of the fourth quarter after several months of trending upwards from historic lows. Congress, barely averting a fiscal fiasco, voted to fund the government through Jan. 15, and to raise the debt ceiling until Feb. 7. 

Although not a long-term solution to address America’s debt crisis, this action should ease uncertainty temporarily, tightening the credit spread and pushing interest rates lower—for the time being. It is important to note, rates are still low compared to historical averages and should provide borrowers with an affordable cost of capital through the end of the year.

Providing you with timely, relevant and forward-looking information to support the decisions you make for your organization is why we publish The Capital Issue. This edition features thoughtful articles that will help you prepare for the future as well as learn from the past. Topics include: a comparison of the Big Three credit rating agencies’ outlooks for the health care, senior living and housing sectors; revenue cycle improvements to improve a hospital’s liquidity; how senior living providers with an FHA-insured loan can make needed facility improvements to stay competitive; a case study of how one affordable housing developer benefited from a long-term financing structure while helping a community keep its residents safe from potential disaster; and what nonprofits can do to protect their investment portfolios from inflation.

As you read the articles that interest you, please let us know if you have any questions by reaching out to the authors as well as to our bankers for answers.




The Big Three Speak: Outlooks on Health Care, Senior Living and Multifamily Housing
10/18/2013

The Big Three Speak: Outlooks on Health Care, Senior Living and Multifamily Housing

When the “Big Three” speak, the world listens.

The three largest credit rating agencies (CRAs) in the United States are Standard & Poor’s (S&P), Fitch Ratings and Moody’s Investor Service. The Big Three, as they are called, have about 95% of the world market share for ratings and their influence on the industries they analyze is undeniable.

Cashing in on Revenue Cycle Improvements
10/17/2013

Cashing in on Revenue Cycle Improvements

There is nothing more important to potential creditors than a borrower’s liquidity position. With all of the uncertainty in the health care industry—and the economy today for that matter—there is no substitute for the margin of safety and flexibility that cash provides.

Facility Improvement: Using FHA Sec. 241(a) to Stay Competitive
10/16/2013

Facility Improvement: Using FHA Sec. 241(a) to Stay Competitive

Senior care providers are faced with the ever-present need to stay competitive within their markets. A big part of which is having updated facilities that meet the demands and needs of today’s and tomorrow’s senior living resident.

A Safe Landing: How a Timely Project Reaped Big Benefits
10/15/2013

A Safe Landing: How a Timely Project Reaped Big Benefits

Whenever a new affordable multifamily property is constructed, both the developer and the community benefit. Although, sometimes, it’s more than just for the obvious reasons.

Guard Against Inflation Revisited: Preserving the Purchasing Power of Your Assets
10/14/2013

Guard Against Inflation Revisited: Preserving the Purchasing Power of Your Assets

Monetary policy in the United States took a dramatic turn with the introduction of quantitative easing. The strategy, in response to the financial crisis of 2008, consists of purchasing outstanding debt in the marketplace by the Federal Reserve. It has increased the balance sheet of the Fed to more than $3.5 trillion dollars.