Washington Regional Hospital is a 425-bed acute care hospital and designated Level II Trauma Center located in Fayetteville, Arkansas. The majority of the medical center’s patients reside in the Fayetteville-Springdale-Rogers MSA., the 22nd fastest growing metropolitan area in the country according to the U.S Census Bureau. Volume growth and the expansion of facilities and service is attributable to a strong local economy anchored by the University of Arkansas and the national headquarters of Walmart, Tyson Foods, and J.B. Hunt Transport Services. Due to the region’s growth, Washington Regional needed approximately $30 million in construction proceeds for a medical office building and parking garage and needed to refinance existing debt.
Working with Washington Regional Medical Center (“WRMC”) and Arkansas Development Finance Authority (“ADFA”) as the conduit issuer, Crews provided the financing to accomplish the objectives of the medical center’s leadership team. We designed and underwrote three series of hospital revenue bonds to fund the expansion project, refinance other debt at lower interest rates, and remove certain covenants such as a debt service reserve fund. The bonds were rated Baa1 by Moody’s at the time of issuance and were subsequently upgraded to A3. The bonds are secured by a security interest in the gross receipts of WRMC and a first mortgage on the real and personal property of the Medical Center.
This transaction demonstrates why Crews has a reputation as a market leader and innovator in Arkansas healthcare finance. Utilizing new bond covenants, which included no specified requirement for a debt service reserve fund, the Series 2015B and 2015C refunding bonds provided enormous interest cost savings of approximately $24.7 million. Crews takes great pride in thinking outside of the box to find ways to serve our clients in extraordinary ways. This is one example where a little hard work delivered an enormous benefit of almost $25 million in interest savings to Washington Regional and indirectly to all of Northwest Arkansas residents.