The New Jersey Health Care Facilities Financing Authority yesterday approved the sale of as much as $225 million of lease-backed revenue bonds to finance construction at the Greystone Park Psychiatric Hospital.
J.P. Morgan Securities Inc. will manage the deal, Obermayer Rebmann Maxwell & Hippel LLP is bond counsel, and Capital Financial Advisors Inc. is the financial adviser.
Dennis Hancock, the authoritys deputy executive director and director of project management, said the deal is expected to come to market sometime in August. Hancock said the authority currently expects to issue $195 million to $200 million of debt for the project.
The resolution authorizing the issuance calls for true interest costs not to exceed 7.5% and for the bonds to reach their final maturity in 2035.
Hancock said the bonds would be backed by lease payments from the states Department of Human Services. The departments money to make those payments will come from funds appropriated by the Legislature for its annual budget.
Finance officials have not yet decided the size and structure of the deal, Hancock said. Such decisions will probably be made about a week to 10 days before the issue comes to market.
In general, I think the department is likely to want a very level debt service payment, Hancock said.
This is the second time the health care authority has issued debt for the project. In 2003, it issued a little more than $19 million of debt to finance preliminary work on the project, and nearly all of that money has already been spent.
The project is of special interest to acting Gov. Richard Codey, who has made mental health a top priority of his administration since taking office last fall.
Greystone originally opened in 1876 on about 730 acres of land in central New Jersey. According to department spokesman Gary Brown, the hospital is the second largest freestanding structure in the country, trailing only the Pentagon. The hospital currently houses about 550 patients in several buildings on its campus.
The new building being constructed will occupy about 220 acres, and construction is expected to take about two years to complete. The project calls for renovating some buildings, taking down others, and providing a total of 510 beds for patients. The new building will have 460 beds, with the remaining beds located in cottages already on the campus.
The authority also has several other deals that are expected to come to market before the end of this year, including a deal for Robert Wood Johnson University Hospital at Hamilton for about $65 million of fixed-rate debt. About two weeks later, the authority expects to bring a deal to market on behalf of the hospital for about $30 million of auction-rate securities.
