Transaction/Project Financing Evaluation
Given the uniqueness of each correction’s project and the detailed knowledge regarding facility economics and the supply/demand factors affecting a project’s potential performance, it is prudent for firms analyzing and structuring correctional financings to supplement their in-house capabilities with that of an expert. Ø CFCS’s expertise and experience is a valuable resource to bond insurers, underwriters, institutional buyers and other capital market participants as they evaluate these unique projects. Ø An experienced expert’s review of the project’s projected occupancy mix, population assumptions, operating budgets and other factors, is an excellent complement to a firm’s internal capabilities. Ø CFCS’s input and analysis will greatly enhance a firm’s decision making and improved risk assessments can be made. Loss Prevention and Monitoring
The dynamic nature of correctional facilities requires greater annual monitoring to track performance and anticipate problems. Financial difficulties at correctional facilities usually develop over time, but once insurers, trustees and bondholders become aware of the issues, it’s often much more difficult to solve or mitigate before an event of default occurs. Ø CFCS can assist an organization in the annual and quarterly monitoring of its corrections' portfolio. CFCS’s monitoring will alert its clients to potential issues much earlier than that of a Trustee or a project’s operator alone, increasing the likelihood of timely corrective action. Ø Correctional facility economics dictate that the last 15% of population will generate almost all of a project’s excess cash flow. By tracking population and other key correctional facility economic data, trends can be spotted and advance knowledge of potential downgrades or default can be greatly enhanced. Ø With advance knowledge, issues can be analyzed, action plans can be developed and all interested parties can work together to mitigate the possibility of default or downgrade. Ø Annual inspections of facilities are also advised as a way to determine operational quality issues which often result in reduced occupancy rates and cash flow. Prior to initiating monitoring services, CFCS can provide an upfront analysis of correctional facility debt holdings. This initial analysis will bring up to date the historical performance trends of the correctional facility, provide a review of lease renewals and appropriations (if applicable) and provide a basis for the commencement of annual data tracking. Although a correctional facility debt instrument may be performing it’s critical to understand the underlying factors contributing to the performance and the risk of non-performance. |
