Even as the deep-pocketed Princeton University faced cutbacks in the dismal economic climate, Princeton HealthCare System has seemed to enjoy a teflon resistance as it moved along with development of its new hospital in Plainsboro.
But the recession finally seems to have caused a scratch in the process — the real estate investment company that was to purchase the current hospital site in downtown Princeton has decided not to move forward with its plans for redevelopment of the site. As a result, PHCS has resumed its search for a developer.
Still, the cutback is not preventing PHCS from moving forward with its development plans: it simultaneously announced that it has successfully completed financing of the new Plainsboro facility.
The hospital announced on May 14 that Philadelphia-based Lupert Adler, which had planned to build housing on the 5.6-acre site, has dropped plans to purchase the property on Witherspoon Street in Princeton. Both Lupert Adler and PCHS had submitted objections to Princeton Borough’s Council on Affordable Housing plan last year. Lupert Adler had stated it felt the zoning was not realistic in its affordable housing requirements, while PHCS referenced the recession and its effects on real estate development.
Hospital officials have cited the bad economy in public reports as the reason Lupert Adler, which would have paid $55 million for the property, dropped its plans.
The current hospital site has been rezoned as a mixed residential, retail, office zone that will accommodate up to 280 residential units with a density bonus for age-restricted units. Non-residential units include a restaurant, medical services, personal services, professional offices, and neighborhood service retail. The houses along Harris Road remain residential, and the existing parking structure will remain to serve the new development. The plan also calls for a net gain of 100,000 square feet of public access open space.
According to the statement from PHCS, CEO Barry Rabner “expressed optimism about the hospital’s options. This change of plans has no impact on financing of the hospital relocation project.”
The good financial news for PCHS, however, is that it also announced that it has successfully completed the financing of its new 237-bed hospital on Route 1 in Plainsboro.
According to the press release, PHCS closed on $355 million in financing, including $180 million of tax exempt, variable rate demand bonds supported by letters of credit from TD Bank and Bank of America. The balance of the financing — $175 million — was in the form of direct bank loans from Wells Fargo/Wachovia Bank and JPMorgan Chase.
“PCHS was able to complete the transaction at favorable interest rates of less than 3 percent annually,” the press release stated. The University Medical Center of Princeton at Plainsboro, which is expected to open in early 2012, is on schedule and on budget, the press release stated.
Rabner called the news “another important step in our journey to build a new regional medical center for residents of central New Jersey. The four banks involved in this process and the Financing Authority have expressed confidence in the vision and solid planning of the new hospital.”
Located on 50 acres of a 160-acre site off Route 1, the new facility will consist of 636,000 feet of interior space, including 237 single patient rooms, operating rooms, treatment areas, and an emergency department, which will be double the size of the current one.