Case Study

Cancer Group Sets New Low Loan Spread Mark

Case Study Details

Financing Type:
Cancer Group Sets New Low Loan Spread Mark

Creates Opportunity From Obstacle

The old adage that "knowledge is power" may have no more meaningful application than when it is applied to bank loans. In particular, when it means taking the knowledge of what a specific bank may be offering in a particularly competitive part of the country and empowering other branches throughout the country to be just as aggressive by sharing that knowledge. Each CMAC closing provides new data from which to push the ever-evolving boundary of favorable financing terms. 

A perfect example occurred with the Cancer Specialists of North Florida (CSNF) in Jacksonville, FL. In this instance, a national bank had recently closed a real estate loan for a CMAC ophthalmology client in Iowa at an exceptionally low loan spread over 30-day Libor. CMAC sent out an RFP to a number of banks in North Florida in hopes of securing more favorable terms than the existing financing. However, with this particular national bank’s appetite in mind, we made sure to connect the North Florida bankers with their colleagues in Iowa, so they could discuss the terms of the recent closing. Sure enough, this information empowered the North Florida bankers to provide exceedingly aggressive terms (5 basis points below the same bank’s sub spread on the Iowa deal). A new lower pricing benchmark was set and CSNF had a proposal in hand that would result in materially lower rates than their current loans. 

However, it was not quite as simple as it might have been. The appraised values meant that the Loan-To-Value on the new financing was going to be above the bank’s approved maximum of 85%. Undeterred, the bank made policy exceptions and took assignment of the previous bank’s swaps and blended a portion of the negative value into the new interest rates as opposed to adding them to the loan amounts. This meant that all of the debt could be refinanced without any cash out of pocket from the physicians.

Recognizing trends, sharing information, applying leverage, and seeking solutions are sometimes all needed at once to produce outcomes that would otherwise never be available.

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