NW Capital Markets served as the investment banker for this $68 million transaction that involved a combination of tax-exempt and taxable senior debt, as well as taxable sub-debt. The deal closed in late January 2020, and the Hospital, located in Sachse, TX (suburban Dallas) is currently under construction. It will be managed by Quorum Health Resources, a national hospital management company that operates more hospitals in this size range than any other company. NW worked with the project developer to design a capital structure to meet the Hospital’s needs and realize the lowest all-in cost of capital, and then worked with a total of 6 institutional investors to fine-tune the structure and achieve a successful underwriting. This hospital development project is the first of 15 new hospital/medical campus development projects that NW will be working on with this development team.

Prior to this deal, there had been no startup hospitals financed in the tax-exempt market over the past 7 years. Moreover, this was the first micro-hospital (a small, community-focused full -service hospital) to be financed with tax-exempt bonds.

Trinity Regional Hospital Sachse, once completed and opened, will provide medical services to a large and rapidly growing community of over 350,000 residents. An independent, third party market analysis and feasibility study found that there is a shortage of more than 250 inpatient beds within the primary service area that lies within a ten-mile radius of the hospital site. The project consists of four phases of development: Phase 1 consists of the development of the hospital and the first of two medical office buildings; Phase 2 will involve the development of an ambulatory surgery center; Phase 3 will consist of the development of a specialty care hospital or post-acute care rehabilitation care facility; and, Phase 4 will consist of expanding surgical capabilities within the hospital and the addition of a second medical office building.

This project exemplifies the type of market that the developer is targeting:

  • High growth – the population of Sachse has doubled over the past 5 years
  • Unmet demand – the current demand in the service area is in excess of 250 inpatient beds.
  • High percentage of commercial insurance penetration (over 80% in this case)
  • Low Medicare & Medicaid percentage
  • Large pool of unaffiliated physicians eager to establish a relationship with the hospital
  • Trinity Regional Hospital Sachse will be affiliated with one of the 3 largest hospital systems in the Dallas-Fort Worth metropolitan area.