For its new construction project the Maria Middelares general hospital in Ghent is borrowing EUR 100m from the European Investment Bank, the first non-university hospital to do so. This loan will mean a big saving in interest payments for the authorities that will be subsidising it. The hospital is borrowing the remaining amount (another EUR 100m) from commercial banks.
The Maria Middelares general hospital is the first non-university hospital in Belgium to be implementing its plans for a new building with a 50% contribution from the European Investment Bank. For the construction of new hospital infrastructure the contracting authority can apply for grants from the relevant authority. These are provided partly by the federal government and partly by the municipalities. When a grant is allocated, the authority providing it repays the principal as well as paying the interest on the loan to the institution arranging the finance. The contracting authority must prefinance the whole amount.
Traditionally, the management of a hospital approaches commercial banks in order to obtain finance for its capital expenditure projects. Knowing that the European Investment Bank provides loans on which the interest rate is significantly more attractive than the rates charged by commercial banks, the Maria Middelares hospital explored the possibility of obtaining a loan from the EIB and found that it was eligible under one of the lending criteria applied by the EIB, namely: “promoting environmental sustainability”. Maria Middelares went through the various stages of a creditworthiness appraisal and this resulted in a EUR 100m loan being awarded by the EIB. The other half of the loan was negotiated with two commercial banks.
For a capital expenditure project costing EUR 200m, repayable over 25 years, this saving in interest payments is a considerable amount, and it is the subsidising authority that will benefit to a large extent. The management of the Maria Middelares hospital is grateful to the EIB for giving it access to this long-term finance.
It is also a testament to the quality and sustainability of the Maria Middelares hospital’s new construction project.
