As part of a multi-year strategic planning initiative, Sheppard Pratt developed a $185 million Capital Improvement Program (CIP). The CIP included (1) the development of a replacement facility for Sheppard Pratt’s existing psychiatric hospital in Ellicott City, Maryland at an estimated cost of $100 million, (2) certain improvements to its Towson campus totaling $30 million, (3) the development of a medical office building with an estimated cost of $25 million and (4) renovations to a warehouse property owned by Sheppard Pratt totaling approximately $15 million. The new 150,000 square foot psychiatric hospital is being constructed on a 44 acre campus (already owned by Sheppard Pratt) located in Elkridge, Maryland.
Sheppard Pratt also considered refinancing it’s then outstanding Series 2012A (fixed rate) and Series 2012B (variable rate) Bonds if more favorable terms could be secured.
With the assistance of Wye River, Sheppard Pratt evaluated its financing alternatives and its capacity to support additional debt to fund its CIP. Based on that assessment, Sheppard Pratt elected debt-finance $100 million of the $185 million CIP. Wye River conducted a financing solicitation on behalf of Sheppard Pratt for both capital markets and bank based financing solutions. After consideration of multiple financing proposals, Sheppard Pratt selected a bank-based financing with a 30 year amortization term and a conventional fixed interest rate committed for 15 years. Because it received such favorable pricing and terms, Sheppard Pratt was able to (1) refinance its Series 2012A Bonds at a lower rate and with a longer commitment term and (2) refinance its Series 2012B Bonds at a favorable fixed rate in the face of potential rising short-term rates.