Cain Brothers - Press Release

Real Estate Monetization with Net Lease Capital

New York – May 6, 2010

Hospitals and health systems with a wide range of credit ratings are evaluating the costs and benefits of monetizing real estate assets and utilizing third party real estate capital to fund the development of medical real estate properties. One particularly active area of real estate financing has been the net lease financing market. The single tenant net lease capital models can be structured in a multitude of ways to provide options and flexibility for the hospital seller/lessee, and they can provide upwards of 100% financing at attractive cost of capital levels.

The latest in Cain Brothers’ Strategies in Capital Finance white papers titled “Real Estate Monetization with Net Lease Capital” discusses three transaction models: sale/leaseback, structured finance leases, and credit tenant leases.

Jim Moloney, Cain Brothers’ Head of Real Estate said, “Separation of real estate ownership from its physical operation is a consistent aspect of all of the models. Investors focus on the credit quality of the hospital’s master lease obligation to pay an absolute net rent, and the hospital enjoys complete control and use of the property without much, if any, interference from the landlord. The net lease capital models are an important source of capital for both existing buildings and new development projects.”

Mike Davis, Managing Director in Cain Brothers’ Real Estate Group said, “The effective yield cost of net lease capital transactions is competitive when compared to this tax-exempt health system weighted average cost of capital thresholds, especially when one factors in the positive impact on days cash on hand, possibly the hospitals’ most important credit statistic over the past decade. In addition, these transactions have minimal counterparty risk and do not depend on LOC backup and the attendant risk of LOC non-renewal.”

***

Please visit the Research page on our website to access and download this report or email strategies64@cainbrothers.com to request a printed copy.

***

Cain Brothers is a leading investment banking firm that focuses exclusively on the health care industry. The firm’s clients include investor-owned and tax-exempt providers, payors, health care information technology and medical technology companies and financial sponsors. The firm has one of the largest teams of experienced bankers and capital markets professionals on Wall Street dedicated to the health care industry. Operating out of nine offices across the country, Cain Brothers creates custom-tailored, market-based capital raising, M&A, real estate, and strategic and financial advisory solutions for its clients.

***

Contacts:

James M. Moloney
415-962-2961
jmoloney@cainbrothers.com

J. Michael Davis
312-604-0577
jdavis@cainbrothers.com