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PNC issues first 'Build America' bond.

PNC announces the completion of the first FHA 242-insured, draw-down Build America Bond (BAB) transaction for Wills Memorial Hospital in Washington, Ga.

The $13 million renovation and expansion financing was structured using an FHA-insured mortgage enhanced by Ginnie Mac securities as a source of payment for the Build America Bonds (BABs).

The BABs carry a 5.01 percent fixed interest rate during construction and 25-year amortization period. Part of the American Recovery and Reinvestment Act, BABs are taxable municipal bonds carrying special tax credits and federal subsidies for municipal bond issuers.

The bonds are intended to reduce the cost of borrowing for state and local government agencies.

"PNC's knowledge of the capital markets combined with their considerable experience working with smaller rural hospitals allowed them to create an innovative financing solution that will benefit us for years to come," said Marvin Goldman, chief executive officer, Wills Memorial Hospital.

"The unique, draw-down structure resulted in significant savings for us at closing and over the term of the financing, which will enable us to act on our commitment to providing greater accessibility to quality healthcare for the community."

The project will replace the Hospital's existing inpatient nursing unit along with several supporting areas. A new main entrance, patient registration area and outpatient specialty clinic will also be constructed. The existing emergency department will be renovated and expanded.

"Because our mortgage and capital markets businesses are integrated, we are able to provide financing options for rural hospitals that they may not otherwise be able to achieve," said Eric J. Mestemaker, director, Red Capital Group, now a part of PNC.

"The FHA 242 enhanced Build America Bond financing will enable Wills Memorial Hospital to realize a low, long-term fixed cost of capital, and will assist Wills in protecting their cash reserves for the long-term, and realizing their mission to provide quality healthcare."
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Title Annotation:FINANCE
Publication:Real Estate Weekly
Date:Sep 30, 2009
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