Welcome to the Summer 2008 edition of The Capital Issue. "Green" themes are dominating the news, and we are glad to share the story of a complex affordable housing financing that will make one community LEED certified. This edition's feature covers green building. Market volatility also remains a hot topic, and we believed it important to revisit these constantly changing conditions in our senior living article. We also explain how this market may make hospital mortgage insurance more popular. Finally, nonprofit investors should receive good insights on less expensive portfolio diversification strategies in this edition's "Nonprofit Minute."
As always, we welcome your suggestions for content. Additionally, we are considering offering The Capital Issue as a hard copy newsletter.
Thomas R. Green, CEO
Sister Mary Alexander Klawinski slept in a chair each night to better take in the oxygen she relied on for more than three years. Unassisted, her breathing was labored. It was just a fact of life.
Hospitals that need to borrow money in today’s tight credit market could find the financing solution they need in a 40-year-old federal program - one that has been seeking to increase awareness at the same time access to other financing options is decreasing.
On the heels of a 2005 - 2006 surge of 41 percent in senior living tax-exempt bond volume, capital investment in the sector was even more bullish in 2007. Bond volume was up nearly 24 percent this past year to roughly $7.3 billion, easily besting analyst estimates. Much of this growing stream of capital continues to fund new construction and substantial rehabilitation projects, further upgrading and expanding the country’s senior living stock, which now totals an estimated 57,840 facilities.
Allegheny Hills Retirement Residence, formerly East Brady Heights, is a 79-unit affordable senior housing community that wanted to make enhancements and upgrades to ensure quality of resident life and continue as a reliable housing provider. It was built in 1981 under the Department of Housing and Urban Development/Federal Housing Administration Section 202 program at the prevailing, and now high, interest rate of 8.5 percent.
The limited financial resources of many nonprofit organizations drive them to minimize expenses as they search for the most cost-effective way to accomplish their missions. Mutual funds and exchange-traded funds (ETFs) can serve as lower-cost methods for nonprofit investors to experience professional investment management while gaining important portfolio diversification. They are available at virtually every financial institution, and require only an internet connection to monitor.