Bringing East Coast Competition to Tulsa, OK with Outstanding Results
The stakes were high as a planned major expansion coincided with a looming loan maturity that would have required refinancing within a very short timeframe. Against this backdrop, Tulsa Bone and Joint selected CMAC Partners to arrange the replacement financing and the new financing for this project in one consolidated debt request for a medical campus that would now reach 150,000 sf. The physicians had always personally guaranteed their real estate debt, but were interested in exploring the possibility of non-recourse financing while increasing their leverage, a challenging proposition.
CMAC Partners approached a number of local, regional and national lenders with this financing request. Surprisingly, in the end it was an out-of-market lender that proved to be the winner on all counts with rates materially below its closest competitor. This lender’s medical specialty group was eager to land a marquee client in Oklahoma and Tulsa Bone and Joint, as one of that state's premier specialty groups, fit the bill. It is a practice made up of some of the top professionals in the orthopaedic field and run by a highly effective administrative team. The bank also impressed Tulsa Bone and Joint with its depository offerings and flexibility of transition, and the decision quickly became clear. CMAC feels quite confident that Tulsa Bone and Joint now has real estate financing with the lowest spread for any owner-occupied medical group in the entire state of Oklahoma and challenges anyone to suggest otherwise!
The loan structure also offered some unusual benefits which one would not see in a plain vanilla financing. Although the construction loan was relatively typical, the bank also agreed to allow the refinance loan facility to remain interest-only for 2 years during construction. It will then term out over a 10-year subsequent term (12 years total) with a 25-year amortization. This custom financing not only allowed the refinance facility to nicely match the construction loan, but also allowed for enhanced cash flow during the construction project – a time when surplus cash flow is always welcome.
