2nd quarter 2011
Asociación de Hospitales de Puerto Rico
UBS Financial Services Incorporated of Puerto Rico
April 26, 2011
Private & Confidential
Important information
This presentation does not commit UBS Financial Services Incorporated of Puerto Rico ("UBSFS PR"), either
expressly or implicitly, to underwrite or purchase securities or to commit any capital, nor does it obligate UBSFS PR
to enter into an underwriting agreement or similar commitment to finance.
UBS Financial Services Incorporated of Puerto Rico’s participation in any financing will be subject to, among other
things, (i) satisfactory completion of all documentation for the financing (including a Bond Purchase Agreement
containing all provisions necessary to satisfy federal securities laws and the Rules of the Municipal Securities
Rulemaking Board, and all other applicable rules and regulations); (ii) satisfactory completion of a customary due
diligence review; (iii) in UBSFS PR’s determination, the absence of any material adverse change in the financial
markets in the United States; (iv) receipt of all required governmental and other approvals and appropriate legal
opinions, including a 10b-5 disclosure opinion, from counsel acceptable to UBSFS PR; and (v) approval of UBS’s
internal capital commitment committees.
1
Table of contents
Section 1
Section 2
Section 3
Section 4
Section 5
Overview of UBS AG
UBS International and Puerto Rico
Local Investment Banking Division
Local Investment Climate
Local Financing Alternatives
2
SECTION 1
Overview of UBS AG
UBS – one of the leading financial firms
 UBS draws on its 150-year heritage to serve private,
institutional and corporate clients worldwide, as well as
retail clients in Switzerland.
 We combine our wealth management, investment banking
and asset management businesses with our Swiss
operations to deliver superior financial solutions and
manage CHF 2.2 trillion in invested assets.
 UBS is present in all major financial centers worldwide. It
has offices in over 50 countries, with about 37% of its
employees working in the Americas, 37% in Switzerland,
16% in the rest of Europe and 10% in Asia Pacific. UBS
employs about 65,000 people around the world.
 Its shares are listed on the SIX Swiss Exchange and the
New York Stock Exchange (NYSE).
4
UBS facts and figures
Know how
Over 150 years experience in private banking
About 64,000 people in 50 countries
Financials1
Market capitalization of CHF 64 billion
CHF 2,180 billion in assets under management
Well capitalized with a BIS Tier 1 capital ratio of 16.7% and a FINMA leverage ratio of 4.7%
Accolades
One of the largest wealth managers in the world
One of the largest global institutional asset managers
UBS Investment Bank ranked #1 nine years in a row in Institutional Investor's All-Europe Research
survey
1
As of September 30, 2010; UBS quarterly report
5
Worldwide presence
More than 65,000 people in 50 countries
6
UBS league tables
Investment Banking League Tables for FYE 2010
Total Investment Banking Fees: Year End 2010
Rank Company
1 JP Morgan
2 BofA Merrill Lynch
3 Goldman Sachs
4 Morgan Stanley
5 Credit Suisse
6 Deutsche Bank
7 Citi
8 Barclays Capital
9 UBS
10 RBS
11 BNP Paribas
12 RBC Capital Markets
13 Nomura
14 Wells Fargo
15 HSBC Holdings
16 Mizuho Financial
17 Lazard
18 Rothschild
19 Jefferies & Co.
20 Sumitomo Mitsui
Total Fees
(US$bn)
$
5.37
4.76
4.39
4.23
3.46
3.37
3.31
2.90
2.79
1.48
1.39
1.36
1.34
1.28
1.17
1.09
1.04
0.78
0.72
0.69
Total M &A Fees: Year End 2010
Rank Company
1 Goldman Sachs
2 Morgan Stanley
3 JP Morgan
4 Credit Suisse
5 Deutsche Bank
6 UBS
7 BofA Merrill Lynch
8 Citi
9 Lazard
10 Barclays Capital
11 Rothschild
12 BNP Paribas
13 Nomura
14 Societe Generale
15 HSBC Holdings
16 Evercore Partners
17 Macquarie Group
18 Blackstone Group
19 Greenhill & Co.
20 Perella Winberg Partners
Source: Wall Street Journal and Thomson Reuters January 2011
Total Fees
(US$mm)
$ 554.5
538.1
440.1
412.8
341.8
329.5
293.1
279.6
275.7
257.8
155.6
128.6
120.4
98.8
81.4
80.6
75.9
75.3
72.7
64.5
7
SECTION 2
UBS International and Puerto Rico
SECTION 2
UBS International and Puerto Rico
UBS Puerto Rico
UBS Puerto Rico
Business structure
Wealth Management
Division






Asset Management
 Fund Advisory
 Fund Administration
Investment Banking
&
Capital Markets







Individual Client Group
Consulting Group
Financial Planning
Retirement Planning
Personal & Corporate Trust
Wealth Management Business Development
Investment Banking
Corporate Advisory
M&A
Primary Market Underwriting & Secondary Market Trading
Client Loan Book
Institutional Sales
Institutional Business Development
10
UBS Puerto Rico – local presence
Commitment with Puerto Rico
 UBS Financial Services Incorporated of Puerto Rico is the longest standing full-service investment firm with over 45 years
in Puerto Rico
 Leader in the full service securities industry with over $15.4 billion in assets as of December 31, 2010 (48% market share)
 Our affiliate, UBS Trust Company of Puerto Rico, provides trust, asset management, and investment consulting services
 Five (5) branches located in Hato Rey, Condado, Caparra, Ponce, and Mayagüez
 UBS PR including its affiliate, UBS Trust Company of Puerto Rico, employs over 380 professionals and support personnel
Local Presence
Local Market Share (AuM)
Other
7.7%
Merrill Lynch
7.8%
Popular
Securities
14.0%
Oriental
5.2%
UBS Financial
Services Inc.
of Puerto Rico
48.4%
Santander
Securities
16.8%
Source: Office of the Commissioner of Financial Institutions of Puerto Rico. Data as of December 31, 2010.
11
SECTION 2
UBS International and Puerto Rico
UBS International
Our market coverage
 354 Financial Advisors overseeing more than $47b in assets and servicing clients from
12 branches in the US and Puerto Rico
Puerto Rico
140 FAs (24.4b)
Mexico
67 FAs (5.5b)
LatAm North
44 FAs (5.1b)
Asia
17 FAs (2.3b)
Other UBS-I Markets
19 FAs (1.6b)
Brazil
21 FAs (2b)
LatAm South
41 FAs (6.9b)
Note: International FA classification based on market of priority as of July 31, 2010;
13
excludes Private Bank Solutions Group. PR data as of September 31, 2010.
International branch locations
214 Advisors with total AuM of USD 23 billion
San Francisco
New York
Financial advisors
12
AuM
USDb 2.0
Markets
Asia / Mex
Financial Advisors
45
AuM
USDb 4.8
Markets LatAm N / LatAm S
/ Br / Mex / Asia / EMEA
San Diego
Miami
Financial advisors
28
AuM
USDb 2.7
Markets
Asia / Br / Mex
Financial Advisors
38
AuM
USDb 3.7
Markets LatAm N / LatAm S/
Br / Mex
McAllen
Financial Advisors
4
AuM
USDb 0.7
Market
Mexico
Houston
Coral Gables
Financial Advisors
31
AuM
USDb 2.5
Market
Mexico
Financial Advisors
48
AuM
USDb 6.2
Markets LatAm N / LatAm S
/ Br / Mex
Notes:
1) 214 Advisors, comprised of 206 Financial Advisors in the Branches, 7 CAs at the PBSG, 1 FA in the Mass
Affluent Desk.
2) Figures as of Sep 30, 2010, including international Bank Services Desks, exclude RIS Assets
3) Blue dots depict Satellite Offices Beverly Hills, Pasadena and San Antonio.
14
Our integrated business model
 UBS International & Puerto Rico
Open Architecture
UBS Global
UBS Wealth Management
Americas
UBS-I & PR
Advisor Group
Solutions
Partnerships
Financial
Advisor
UBS
Investment
Bank
Investment
Banking
UBS
Clients
Asset
Global Asset
Management Management
Financial
Advisor
Open Architecture
Open Architecture
Wealth Management /
WM Consulting
Capital Markets & Lending
15
Open Architecture
SECTION 3
Local Investment Banking Division
Local Investment Banking
Objectives and Structure
 Provide Puerto Rico based clients with a full range of investment banking solutions, and leveraging, as necessary,
the global resources of the Firm
 Develop innovative products benefiting from tax advantages provided under Puerto Rico law to provide superior
solutions for both issuers and investors in the Island
 Enhance the reputation and credibility of the Firm in Puerto Rico by providing the top corporate and governmental
clients with superior service focused on long-term relationships
17
Local Investment Banking
Scopes of services and products
 Municipal transactions
– US Municipals (103) – Alliance with Goldman Sachs
– Local Municipals
– Public-Private Partnerships
 Corporate transactions
– Equity Capital Raise-Ups
– Follow-On Offerings
– Exchange Offerings
– Corporate Debt Offerings
– AFICA's
– Mergers & Acquisitions Advisory Services
– Large Transactions – through UBS-IB
– Small to Mid-Size Transactions – through the
Corporate Advisory Group-PR and UBS International
 Mutual funds
– Fund Origination
– Leverage Products
18
Local Investment Banking
Municipal Finance

Ranked first in volume of negotiated senior managed transactions for the Commonwealth of Puerto Rico since 2009

Led five (5) billion plus bond financings in the local market since 2009:

–
$1.18 bn – Government Development Bank Senior Notes Series C&D (8/10)
–
$1.60 bn – Government Development Bank Senior Notes Series A&B (7/10)
–
$1.36 bn – Government Development Bank Senior Notes Series C&D (12/09 and 1/10)
–
$1.22 bn – Puerto Rico Sales Tax Financing Corporation (COFINA 2), Series 2009B (6/09)
–
$1.48 bn – Government Development Bank Senior Notes Series A&B (1/09)
Led the largest Build America Bond transaction executed in the local market:
–

$355.7 mm – PR Electric Power Authority: Power Revenue Bonds, Series EEE (12/10)
Led the largest AFICA transaction executed in the local market in over 10 years
–
$59.65 mm – Industrial Revenue Refunding Bonds, 2011 Series A (Galeria Tower at San Patricio Project)

Co-Manager to over $12 billion in 103 Muni Bonds to the Commonwealth of PR and its Agencies or Corporations since 2009

UBS acted as Lead Manager in 67.0% of all local transactions since 2009 (94.4% if credited by issue size) 1
Local Municipal Financings Since 2009
Date
Mar 2011
Mar 2011
Dec 2010
Aug 2010
July 2010
May 2010
Apr 2010
Jan 2010
Dec 2009
Jun 2009
Jan 2009
Jan 2009
Total
1
Issuer
AFICA (Caparra Hills, Inc.)
AFICA (Coco Beach Resort)
PR Electric Power Authority
Government Development Bank
Government Development Bank
PR Electric Power Authority
PR Electric Power Authority
AFICA (Caparra Center Associates)
Government Development Bank
PR Sales Tax Financing Corp.
Government Development Bank
Government Development Bank
Issue
Galeria Tower Project - 2011A
Coco Beach Resort Project - 2011A
Power Revenue Bonds Series EEE
2010 Notes Series C&D
2010 Notes Series A&B
Power Revenue Bonds Series BBB
Power Revenue Bonds Series YY
San Patricio Plaza Project - 2009A
2009 Notes Series C&D
Subordinated Bonds Series 2009B
2009 Notes Series B
2009 Notes Series A&B
Assumes full credit to the lead managing underwriter or placement agent.
UBS Role
Lead
-Lead
Lead
Lead
Co-Senior
Co-Senior
-Lead
Lead
Lead
Lead
Issue Size ($mm)
$
59.65
26.10
355.73
1,182.89
1,600.00
76.80
320.18
21.78
1,356.08
1,217.92
285.47
1,480.00
$
7,982.58
19
Local Investment Banking
Corporate Finance
 Lead Dealer Manager to First Bank's Exchange Offer of $487 mm (8/10)
 Placement Agent to the DBR Dorado Beach Hotel issuance of notes totaling $166 mm (7/10)
 Lead Dealer Manager to Doral's Exchange Offer of $52 mm (12/09)
 Sole Manager for the PR Housing & Human Dev. Trust (FIDEVI) issuance of Notes totaling $210 mm (9/09)
 Lead Dealer Manager to Popular, Inc's Exchange Offer of $934 mm (8/09)
 Sole Manager for the Punto Verde Grantor Trust issuance of Secured Notes totaling $35 mm (11/08)
 Sole Manager for the Puerto Rico Conservation Trust Fund issuance of Notes totaling $81.5 mm (8/08)
 Completed the largest local Preferred Stock Issuance for Popular, Inc. in the amount of $400 mm (5/08)
Fund products
 Issued over $1.2 bn in structured products for the Fund’s leverage program since 2006
– Structured range, fixed, bullet, spread range, absolute barrier, and index-linked notes
 Raised a total of $413.6 mm in Equity for the UBS Family of Funds since 2006
– Raised over $29 mm for the Puerto Rico Fixed Income Fund VI (9/08 – 12/08)
– Raised over $36 mm for the Puerto Rico AAA Bond Fund II (9/08 – 12/08)
– Raised over $345 mm for the Puerto Rico Fixed Income Fund V (1/07 – 4/08)
20
Local Investment Banking
Execution of Over $22 billion in Transactions
Historical Transactions Since 2008
Popular Inc.
8.25% Non-cumulative PFDStock
Series B
$400,000,000
Joint Bookrunners
May 2008
Puerto Rico Conservation Trust
Secured Notes Due 2018
$81,500,000
Sole Manager
August 2008
Puerto Rico Fixed Income Fund VI
Common SharesFund
$29,297,520
Sole Manager
December 2008
Commonwealth of Puerto Rico
Public Improvement Refunding Bond
Series 2008
$190,135,000
Co-Manager
May 2008
Commonwealth of Puerto Rico
Public Improvement Bonds of 2008, Series A
$250,000,000
Co-Senior
September 2008
Government Development Bank of
Puerto Rico
Senior Notes Offering, Series A&B
$1,480,000,000
Lead Manager
December-January 2008-2009
Commonwealth of Puerto Rico
Employees Retirement System
Series A,B & C
$2,947,648,343
LeadManager
Jan-June 2008
Punto Verde Grantor Trust 2008-2
Tax Exempt Notes
$35,000,000
Sole Manager
November 2008
Puerto Rico Sales Tax Financing
Corporation
Sales Tax Revenue Bonds, Series 2009B
$1,217,915,799.2
Co-Lead Manager
June 2009
Doral Financial Corporation
Exchange Offer to Common Stock
$52,000,000
Lead Dealer Manager
December 2009
Puerto Rico AAA Portfolio Bond Fund II
Common SharesFund
$36,069,089
Sole Manager
December 2008
Popular Inc.
Exchange Offer
to Common Stock
$934,000,000
Lead Dealer Manager
August 2009
Dorado
Beach
FIDEVI
Puerto Rico Housing and Human
Development Trust Fund
Secured Notes 2009, Series A-D
$210,000,000
Sole Placement Agent
September 2009
Puerto Rico Sales Tax Financing
Corporation
Sales Tax Revenue Bonds, Series 2008A
$737,046,992
Lead-Manager
July 2008
Government Development Bank of
Puerto Rico
Senior Notes Offering, Series C&D
$1,356,076,000
Lead Manager
December-January 2009-2010
DBR Dorado Owner (Dorado Beach)
Senior Notes Offering
$166,132,814
Placement Agent
July 2010
Caparra Hills, Inc.
Government Development Bank of
Puerto Rico
Senior Notes Offering, 2010 Series A&B
$2,782,889,000
Lead Manager
July / August 2010
First BanCorp
Exchange Offer to Common Stock
$487,053,200
Lead Dealer Manager
August 2010
Puerto Rico Industrial, Tourist, Educational, Medical
Puerto Rico Electric Power Authority And Environmental Control Facilities Financing Authority
Industrial Revenue Ref. Bonds, 2011 Series A
Power Revenue Bonds, Series EEE
$59,649,744.50
$355,730,000
Joint-Lead Dealer Manager
December 2010
Lead Manager
March 2011
21
UBS Healthcare Credentials.ppt
UBS Healthcare Group – Selected Marquee Transactions
Since 2009, UBS has maintained its position as a leading investment bank to the healthcare industry
Mergers and Acquisitions
 Advised clients on over $25
billion of M&A assignments
Pending
$2.4 billion
Acquisition of
Capsugel
Pending
$420 million
Sale to CSC
Financial Advisor
Pending
$720 million
Merger with Abbott
India Limited

Equity Financing
Executed over $15 billion of
equity financing for our clients
March 2011
April 2011
$208 million
Initial Public Offering
Financial Advisor
Pending
$3.2 billion
Acquisition of
Emergency Medical
Services
Financial Advisor
Lead Bookrunner
Lead Bookrunner
Lead Bookrunner
April 2011
$6.1 billion
Acquisition of Real
Estate Assets of HCR
ManorCare
Financial Advisor
February 2011
$300 million
Block Trade of
Common Stock
December 2010
$1.5 billion
Follow-on Offering
December 2010
$2.3 billion
Initial Public Offering
Sole Financial Advisor
April 2011
$2.4 billion
Acquisition of Real
Estate Assets of
Genesis
Sole Financial Advisor
Sole Bookrunner
Joint Bookrunner
Joint Bookrunner
March 2011
$1.5 billion
Acquisition of Priory
Healthcare
March 2011
$675 million
Acquisition of
Sterigenics
December 2010
$363 million
Sale to Leonard
Green & Partners
December 2010
$61 million
Follow-on Offering
December 2010
$503 million
Follow-on Offering
October 2010
$852 million
Initial Public Offering
Financial Advisor
Joint Financial Advisor
Sole Financial Advisor
Sole Bookrunner
Joint Bookrunner
Joint Bookrunner
Concurrent
$1.42 billion Common
Stock Offering and
$719 million Cumulative
Convertible Perpetual
Preferred Stock
February 2011
$123 million
Initial Public Offering

Debt Financing
Executed over $150 billion of
debt financing for our clients
Pending
$1.1 billion
Senior Secured
Credit Facility
Lead Left Bookrunner
$460 million
Senior Unsecured
Notes
Joint Bookrunner
March 2011
$525 million
Senior Secured
Facilities to Finance
Acquisition of
Sterigenics
Joint Lead Arranger /
Joint Bookrunner
February 2011
$250 million
Senior Notes
Offering
Lead Bookrunner
$605 million
Senior Secured
Credit Facilities
Lead Arranger / Lead
Bookrunner
Pending
$2.7 billion
Senior Debt
Facilities to Finance
Acquisition of Ems
Joint Lead Arranger/
Joint Bookrunner
March 2011
$1.4 billion
Senior Notes Offering
Lead Bookrunner
February 2011
$400 million
Bridge Loan
Sole Lead Arranger
April 2011
$2.4 billion
Bridge Loan to
Finance Acquisition
of Real Estate Assets
of Genesis
Lead Left Arranger
February 2011
$750 million
Bond Offering
Joint Bookrunner
January 2011
$2.4 billion
Senior Notes
Offering
March 2010
$4.4 billion
Bond Offering
Lead Bookrunner
Joint Bookrunner
March 2010
$3.0 billion
Notes Offering
June 2009
$4.5 billion
Senior Unsecured
Notes Offering
November 2010
$545 million
Sale to HealthSpring,
Inc
October 2010
Sale to Leonard
Green & Partners
October 2010
$810 million
Sale of Arizant
August 2010
$529 million
Follow-on Offering
April 2010
$400 million
Initial Public Offering
Sole Financial Advisor
Joint Financial Advisor
Sole Financial Advisor
Joint Bookrunner
Joint Bookrunner
Co-Manager
Co-Manager
Joint Bookrunner
May 2009
$7.0 billion
Bridge Loan to
Finance the
Acquisition of
Schering-Plough
Corporation
Co-Arranger
November 2009
$8.0 billion
Merger of Glaxo’s
HIV Division with the
HIV Division of Pfizer,
Inc.
Joint Financial Advisor
September 2009
$1.3 billion
Sale of Injectables
Business to Novartis
AG
September 2009
$950 million
Initial Public Offering
September 2009
$1.3 billion
Initial Public Offering
August 2009
$367 million
Initial Public Offering
March 2009
$13.5 billion
Notes Offering
Sole Financial Advisor
Co-Manager
Joint Bookrunner
Joint Bookrunner
Joint Bookrunner
March 2009
$27.5 billion
Credit Facilities to
Finance the
Acquisition of Wyeth
Joint Lead Arranger
February 2009
$14.1 billion
Euro Bond Offering
$16.5 billion
US Bond Offering
Joint Bookrunner
August 2010
$1.3 billion
Acquisition of
Eclipsys Corp
Joint Financial Advisor
November 2009
$512 million
Follow-on Offering
22
UBS Healthcare Credentials.ppt
UBS is a Top Ranked Healthcare M&A Advisor
Advised clients on over $25 billion of M&A assignments since 2009
Pending
$2.4 billion
Acquisition of Capsugel
Pending
$420 million
Sale to CSC
Pending
$277 million
Acquisition of TomoTherapy
Pending
$3.2 billion
Acquisition of Emergency
Medical Services
Pending
$720 million
Merger with
Abbott India Limited
April 2011
Sale to Acadia Healthcare
April 2011
$2.4 billion
Acquisition of Real Estate
Assets of Genesis
Financial Advisor
Financial Advisor
Sole Financial Advisor
Financial Advisor
Sole Financial Advisor
Sole Financial Advisor
Sole Financial Advisor
April 2011
$6.1 billion
Acquisition of Real Estate
Assets of HCR ManorCare
March 2011
$1.5 billion
Acquisition of Priory
Healthcare
March 2011
$675 million
Acquisition of Sterigenics
January 2011
$860 million
Acquisition of Senior Living
Communities
December 2010
$363 million
Sale to Leonard Green
Partners
November 2010
$545 million
Sale To HealthSpring, Inc
October 2010
Sale to Leonard Green
Partners
Financial Advisor
Financial Advisor
Joint Financial Advisor
Sole Financial Advisor
Sole Financial Advisor
Sole Financial Advisor
Joint Financial Advisor
/
/
October 2010
$810 million
Sale of Arizant
October 2010
$288 million
Acquisition of Creganna
Tactx Medical
September 2010
$2.4 billion
Acquisition of Healthscope
September 2010
Re-Licensing Of rights for
Omacor/Lovaza to Abott
September 2010
Investment in MedExpress
August 2010
$410 million
Acqusition of Vanbreda
August 2010
Sale to Ingenix
Sole Financial Advisor
Sole Financial Advisor
Joint Lead Financial Advisor
Sole Financial Advisor
Sole Financial Advisor
Sole Financial Advisor
Joint Financial Advisor
August 2010
$1.3 billion
Acquisition of Eclipsys Corp
August 2010
$98 million
Sale of Biofuel division to
BP
July 2010
$380 million
Acquisition of Alnara
Pharmaceuticals
July 2010
$150 million
Sale to Hospira
June 2010
$186 million
MOE w/ Accelyrs
March 2010
Sale to BC Partners
Joint Financial Advisor
Sole Financial Advisor
Sole Financial Advisor
Sole Financial Advisor
Sole Financial Advisor
Sole Financial Advisor
February 2010
$668 million
Sale of 49% interest in
portfolio of Life Sciences
buildings
Sole Financial Advisor
23
UBS Healthcare Credentials.ppt
UBS is a Top Ranked Healthcare Common Stock Bookrunner
UBS has been a bookrunner of choice in turbulent markets, having bookrun 45 common stock offerings
since 2009
February 2011
$123 million
Initial Public Offering
February 2011
$300 million
Block Trade of
Common Stock
December 2010
$1.5 billion
Follow-on Offering
December 2010
$61 million
Follow-on Offering
Sole Bookrunner
March 2011
Concurrent $1.42 billion
Common Stock Offering and
$719 million Cumulative
Convertible Perpetual
Preferred Stock
Lead Bookrunner
Lead Bookrunner
Sole Bookrunner
Joint Bookrunner
Sole Bookrunner
December 2010
$2.3 billion
Initial Public Offering
December 2010
$503 million
Follow-on Offering
November 2010
$54 million
Initial Public Offering
October 2010
$852 million
Initial Public Offering
September 2010
$263 million
Follow-on Offering
September 2010
$146 million
Initial Public Offering
August 2010
$124 million
Follow-on Offering
Joint Bookrunner
Joint Bookrunner
Lead Bookrunner
Joint Bookrunner
Joint Bookrunner
Sole Bookrunner
Co-Manager
August 2010
$529 million
Follow-on Offering
June 2010
$109 million
Initial Public Offering
June 2010
$445 million
Follow-on Offering
June 2010
$152 million
Convertible Bond Offering
April 2010
$400 million
Initial Public Offering
April 2010
$198 million
Follow-on Offering
April 2010
$292 million
Follow-on Offering
Joint Bookrunner
Sole Bookrunner
Joint Bookrunner
Joint Bookrunner
Joint Bookrunner
Joint Bookrunner
Joint Lead Manager
March 2010
$342 million
Convertible Bond Offering
March 2010
$68 million
Follow-on Offering
January 2010
$58 million
Follow-On Offering
January 2010
$180 million
Convertible Bond Offering
December 2009
$184 million
Initial Public Offering
October 2009
$45 million
Initial Public Offering
September 2009
$1.3 billion
Initial Public Offering
Joint Bookrunner
Joint Bookrunner
Joint Bookrunner
Joint Bookrunner
Co-Manager
Sole Bookrunner
Joint Bookrunner
April 2011
$208 million
Initial Public Offering
March 2011
$40 million
Block Trade of
Common Stock
Lead Bookrunner
24
UBS Healthcare Credentials.ppt
UBS is a Leading Provider of Debt Financing
UBS has executed over $150 billion of debt financing for our clients since 2009
Pending
$1.1 billion
Senior Secured Credit
Facility
Lead Left Bookrunner
$460 million
Senior Unsecured Notes
Joint Bookrunner
February 2011
$250 million
Senior Notes Offering
Lead Bookrunner
$605 million
Senior Secured Credit
Facilities
Lead Arranger / Lead
Bookrunner
April 2011
$3.3 billion
Bridge Loan to Finance
Acquisition of Real Estate
Assets of HCR ManorCare
Pending
$2.7 billion
Senior Debt Facilities to
Finance Acquisition
of EMS
Joint Lead Arranger/
Joint Bookrunner
April 2011
$2.4 billion
Bridge Loan to Finance
Acquisition of Real Estate
Assets of Genesis
Lead Left Arranger
Joint Lead Arranger
January 2011
$2.4 billion
Senior Notes Offering
January 2011
$674 million
Senior Notes Offering
$169 million
RCF/Acquisition Facility
Lead Bookrunner
Joint Bookrunner
January 2011
$250 million
Senior Notes Offering
April 2010
$200 million
Senior Notes Offering
Joint Bookrunner
March 2011
$525 million
Senior Secured Facilities
to Finance Acquisition of
Sterigenics
Joint Lead Arranger /
Joint Bookrunner
December 2010
$200 million
Notes Offering
Joint Bookrunner
March 2011
$37 million
Amend, Extend & Add-on
to Existing Credit Facility
Lead Arranger /
Sole Bookrunner
March 2011
$195 million
Loan Repricing
March 2011
$1.4 billion
Senior Notes Offering
Lead Bookrunner
February 2011
$750 million
Bond Offering
Lead Left Arranger
February 2011
$400 million
Bridge Loan
Sole Lead Arranger
Joint Bookrunner
December 2010
$200 million
Senior Notes Offering
May 2010
$335 million
Senior Secured Credit
Facility
Joint Bookrunner
December 2010
$500 million
Bond Offering
December 2010
$400 million
Senior Notes Offering
November 2010
$215 million
Senior Secured Facilities
to Finance Acquisition of
Excelitas Technologies
Joint Bookrunner
Joint Bookrunner
Joint Lead Arranger
/
/
November 2010
$350 million
Senior Notes Offering
October 2010
$384 million
Consent Solicitation of
Millipore’s Senior Notes
October 2010
$315 million
Senior Notes Offering
October 2010
Senior Debt Facilities to
Finance Acquisition of
Aspen Dental
September 2010
$1.3 billion
Senior Debt Facilities to
Finance Acquisition of
Healthscope
August 2010
$750 million
Bond Offering
August 2010
$1.0 billion
Bond Offering
August 2010
$2.3 billion
Leveraged ReCapitalization
August 2010
$720 million
Loan to Finance
Acquisition of Eclipsys
Joint Bookrunner
Sole Solicitation Agent
Joint Bookrunner
Joint Lead Arranger
Joint Lead Arranger
Joint Bookrunner
Joint Bookrunner
Co-Manager
Joint Lead Arranger
May 2010
$300 million
Bond Offering
May 2010
$360 million
Bond Offering
April 2010
$160 million Term Loan
$22 million DD Term Loan
$20 million Revolver
April 2010
$280 million
Bond Offering
March 2010
$4.4 billion
Bond Offering
March 2010
$3.0 billion
Notes Offering
March 2010
$1.0 billion
Notes Offering
March 2010
$5.0 billion
Bond Offering
March 2010
$300 million
Notes Offering
Joint Bookrunner
Joint Bookrunner
Joint Bookrunner
Joint Bookrunner
Joint Bookrunner
Co-Manager
Co-Manager
Co-Manager
Co-Manager
25
SECTION 3
Local Investment Banking Division
Corporate Advisory Group
Investment Banking
Corporate Advisory Group
 The Corporate Advisory Group (CAG) of UBS Financial Services Incorporated of Puerto Rico offers broad
corporate finance services to private companies and their owners, in identifying and resolving corporate
finance related issues as part of a comprehensive approach to wealth management that integrates
business, personal and family needs and objectives.
 Provides services to companies in the following products:
– M&A: Sell-Side Advisory
– M&A: Buy-Side Advisory
– Tax Credit Advisory
– Debt Financing Advisory
– Equity Financing Advisory
– General Financial Advisory
 Over the years our bankers have had experience covering corporate finance transactions in the following
industries
– Financial Institutions & Insurance
– Commercial Real Estate (Incl. Hotels)
– Industrials
– Retail & Consumer Products
– Privatization & Public Private Partnerships
– Food Distribution & Services
– Healthcare & Pharmaceuticals
27
Investment Banking
Corporate Advisory Group
 Representative Engagements
Marpor Corporation
Williams
Hospitality
Hotels
28
SECTION 4
Local Investment Climate
Local Investment Climate - Economic Overview
Economic Events vs. Gross National Product
Local Bank
Consolidation
1st PR Credit
Downgrade from
A- to BBB
PR Government
Shutdown
2nd PR Credit
Downgrade from
BBB to BBB-
2.5% 1.9%
US Recovery &
Reinvestment Act
0.5%
0.5%
Moody's
Recalibration of
PR Credit from
Baa3 to A3
Puerto Rico Stock
Index Low – 1,245
(1.5% )
Puerto Rico Stock
Index High – 20,208
0.7%
(1.0% )
(1.2% )
(2.8% )
PR Budget Deficit
Crisis - $3.3mm
Sources: Puerto Rico Planning Board & IHS-Global Insight.
Commonwealth Report March 2011.
Note: 2012 figures are estimates from the PR Planning Board and IHS-Global Insight
as of March 2011.
Fitch Initiates
PR Credit
Rating at BBB+
20
11
20
10
20
08
20
07
20
06
(5.5% )
(3.6% )
(3.7% )
Global Financial
Crisis & Credit
Crunch
20
09
(3.5% )
20
05
Projected
PR Economic &
Reconstruction Plan
20
12
4.5%
S&P PR Credit
Upgrade from
BBB- to BBB
S&P Outlook Change
from Stable to Positive
PR Fiscal and
Government Reforms
Note: UBS Financial Services Incorporated of Puerto
Rico does not provide legal or tax advice.
30
Local Investment Climate - Economic Overview
Gross National Product: USA vs. Puerto Rico – A growing divergence…
Average difference from 2001 to 2005: 1.0%
Average difference from 2006 to 2011: 3.2%
4.5%
2.7%
3.1%
2.7%
2.4%
1.9%
2.5%
1.8%
2.1%
0.5%
Projected
3.0%
0.7%
1.9%
1.5%
(1.0% )
(1.2% )
(1.5% )
(3.5% )
(2.8% )
(3.6% )
US - Gross National Product
Sources: Puerto Rico Planning Board & IHS-Global Insight.
Commonwealth Report March 2011.
Note: 2012 figures are estimates from the PR Planning Board and IHS-Global Insight as of March 2011.
20
12
20
11
20
10
20
09
20
08
20
07
20
06
20
05
20
04
20
03
20
02
20
01
(5.5% )
PR - Gross National Product
Note: UBS Financial Services Incorporated of Puerto
Rico does not provide legal or tax advice.
31
Local Investment Climate - General Obligation Bonds
Rating Upgrade from Standard & Poor's to "BBB" from "BBB-"
Rating Upgrade

On March 7, 2011 Standard & Poor's increased the credit rating of the Commonwealth of Puerto
Rico – General Obligation bonds to "BBB" from "BBB-"
–
1st credit upgrade by Standard & Poor's in Puerto Rico history
–
1st Positive rating action after six consecutive downgrades or "negative" outlooks since 2000
–
1st Upgrade to any US state since 2009 (Louisiana)
–
S&P also assigns a "stable" outlook to the Commonwealth debt
Outlook Reflection

The Rating Upgrade reflects the following:
1. 17% reduction in Government payroll expenditures
2. Recently approved tax measures to help reduce the current budget deficit
3. Recent implementation of Revenue enhancement measures
4. Strong ties to US economy
"The upgrade is based on our view of the commonwealth's recent revenue
performance and continued efforts to achieve fiscal and budgetary balance. We believe that the collections
from the recently enacted excise tax, which have exceeded the government's expectations, will provide the
commonwealth with additional flexibility to continue to narrow the budget gap and achieve structurally
balanced budgets in the next two years"
Standard & Poor's Commentary
Source: Standard & Poor's, Credit Rating Upgrade to "BBB" (March 7, 2010).
Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice.
32
Local Investment Climate - Evolution of Capital Markets
39
36
33
30
$ billion (cumulative)
27
$9.28 billion
Phase I
Phase II
(Government Bonds (Government Bonds, Corporate Debt,
and AFICA Bonds)
Preferreds and Funds)
Funds
Common Stock
$5.22 billion
Corporate Debt
&
Preferreds
24
21
18
15
$21.17 billion
12
Government
Bonds
9
6
$2.97 billion
3
AFICA Bonds
0
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
Year
Includes: Local market AFICAs and Puerto Rico Government bonds, (ii) corporate notes and preferred stocks (except equity-linked notes issued by local banks and
securities related to the funds’ leverage program), and (iii) closed-end and open-end funds that invest in fixed income securities. Source: GDB, UBS, Santander, and
Popular (4/1/11).
Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice.
33
Local Investment Climate – Investor Profile
Profile of Local Investors (individuals and corporations)
Seeks
yield
High
Credit Quality
(Munis)
Principal
Protection
Retail
Investors
Primary Buy
and Hold
Long
Term
Well Known
Names
34
Local Investment Climate - Municipal Market
Over $8.1 billion in local municipal financing since 2009
 Five (5) billion plus issuances have been financed in the local market since 2009:
–
–
–
–
–
$1.18 bn – Government Development Bank Senior Notes Series C&D (8/10)
$1.60 bn – Government Development Bank Senior Notes Series A&B (7/10)
$1.36 bn – Government Development Bank Senior Notes Series C&D (12/09 and 1/10)
$1.22 bn – Puerto Rico Sales Tax Financing Corporation (COFINA 2), Series 2009B (6/09)
$1.48 bn – Government Development Bank Senior Notes Series A&B (1/09)
 Three (3) Build America Bond transactions were executed in the local market:
– $355.7 mm – PR Electric Power Authority: Power Revenue Bonds, Series EEE (12/10)
– $182.2 mm - Puerto Rico Sales Tax Financing Corporation (COFINA 2), Series 2010D&E (6/10)
– $320.2 mm - PR Electric Power Authority: Power Revenue Bonds, Series YY (4/10)
 Three (3) AFICA transactions have been executed in the local market since 2009, including the largest in over 10
years:
– $59.65 mm – Industrial Revenue Refunding Bonds, 2011 Series A (Galeria Tower at San Patricio Project)
Local Municipal Financings Since 2009
Date
Mar 2011
Mar 2011
Dec 2010
Aug 2010
July 2010
June 2010
May 2010
Apr 2010
Jan 2010
Dec 2009
Jun 2009
Jan 2009
Jan 2009
Total
Issuer
AFICA (Caparra Hills, Inc.)
AFICA (Coco Beach Resort)
PR Electric Power Authority
Government Development Bank
Government Development Bank
PR Sales Tax Financing Corp.
PR Electric Power Authority
PR Electric Power Authority
AFICA (Caparra Center Associates)
Government Development Bank
PR Sales Tax Financing Corp.
Government Development Bank
Government Development Bank
Issue
Issue Size ($mm)
Galeria Tower Project - 2011A
$
59.65
Coco Beach Resort Project - 2011A
26.10
Power Revenue Bonds Series EEE (BABs)
355.73
2010 Notes Series C&D
1,182.89
2010 Notes Series A&B
1,600.00
Subordinated Bonds Series 2010 D&E (BABs)
182.19
Power Revenue Bonds Series BBB
76.80
Power Revenue Bonds Series YY (BABs)
320.18
San Patricio Plaza Project - 2009A
21.78
2009 Notes Series C&D
1,356.08
Subordinated Bonds Series 2009B
1,217.92
2009 Notes Series B
285.47
2009 Notes Series A&B
1,480.00
$
8,164.77
35
Local Investment Climate – Capital Market Liquidity
Funding and liquidity provided at peak of financial crisis and during the ongoing
recession…
GDB 2008 Notes
Series A&B
GDB 2009 Notes
Series A&B
GDB 2009 Notes
Series C&D
$250 million
$1,356 million
$1,230 million
COFINA Sub. Bonds
Series 2009B
250
$1,218 million
GDB 2010 Notes
Series A&B
PREPA
Series EEE
$1,600 million
$356 million
PREPA
Series YY
GDB 2010 Notes
Series C&D
$320 million
$1,180 million
210
190
170
150
130
110
-1
1
Ap
r
11
Fe
b-
De
c10
10
O
ct
-
-1
0
Au
g
0
Ju
n1
-1
0
Ap
r
10
Fe
b-
De
c09
09
O
ct
-
-0
9
Au
g
9
Ju
n0
-0
9
Ap
r
09
Fe
b-
De
c08
08
O
ct
-
-0
8
90
Au
g
Spread to Treasury
230
30YR MMA / 30YR Treasury Ratio
36
Source: Official Statements and Bloomberg data. 30 Year MMA Muni Index vs. US 30 Year Treasuries for the period 9/5/08-3/31/10.
Local Investment Climate - Private Issuers / Transactions
The local capital market has the ability to provide significant funding to private
sector entities
AEELA
Senior Notes Offering
$55,520,000
August 2005
Popular North America
EDB Notes – Private Placement
$275,000,000
December 2007
Doral Financial.
Exchange Offer to Common Stock
$105,600,000
May 2009
First BanCorp
Exchange Offer to Common Stock
$487,053,200
August 2010
Universal
7.15% Pfd. Stock Class B
$115,000,000
December 2005
Triple-S
Initial Public Offering
$203,000,000
December 2007
Popular Inc.
Exchange Offer to Common Stock
$934,000,000
August 2009
Triple-S
Senior Notes Offering
$95,000,000
January 2006
Popular Inc.
8.25% Pfd. Stock Series B
$400,000,000
May 2008
Doral Financial.
Exchange Offer to Common Stock
$52,200,000
October 2009
Dorado
Beach
DBR Dorado Owner (Dorado Beach)
Senior Notes
$166,132,814
July 2010
Source: UBS Financial Services Inc. of Puerto Rico and transaction Prospectus.
AEELA
Private Sale of Portfolio
$69,424,737
December 2010
37
SECTION 5
Local Financing Alternatives
Financing Alternatives - US and Local Capital Markets
Puerto Rico has access to various capital markets that provide lower costs of
financing
 The use of proceeds for public purpose will determine the market available to issue
debt
– US tax-exempt market provides the lowest costs for financing
– If the financing doe not qualify for the US tax-exempt market, the local tax-exempt market
provides lower costs than the US Taxable market
 Credit of the Issuer is very Important in
the local market
US Taxable Market
– Investment Grade: BBB- / Baa3 or better
Puerto Rico TaxExempt Market
US Tax-Exempt
Market
Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice.
39
Financing Alternatives - Local Financing Alternatives
The local market provides attractive financing alternatives for infrastructure
projects
 Local commercial banking market
– Large historic banking market on-island but limited history of large scale project lending
– International lenders with a major on-island presence include:
 BBVA
 Santander
 Scotia Bank
– Many of the on-island lenders are still recovering from the credit crisis and are currently not lending but
capacity may return
– Some infrastructure lenders do not consider Puerto Rico to be the US market and will not lend to the
local market
 Issuance through Government Entities
– Interest is tax-exempt
– Special / Limited Purpose Obligations issued by:




AFICA – Industrial Developments
FHA Section 242 Program (HUD Guarantee)
Special Facility Revenue Bonds
Local Public Corporations
• PR Highways and Transportation Authority
• PR Aqueduct and Sewer Authority
• PR Electric Power Authority
Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice.
40
SECTION 5
Local Financing Alternatives
AFICA Financing
Financing Alternatives - AFICA
AFICA Overview
 The Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities
Financing Authority (AFICA), was established in 1977 as a public corporation affiliated to the
Government Development Bank for Puerto Rico to provide access to tax-exempt financing for
economic development projects.
 Qualified private projects, in a wide range of industrial, tourism, commercial, medical, and
educational related areas, have access to borrow low-cost funds at tax-exempt fixed rates for up to
30 years
 Interest paid on AFICA Bonds (“AFICA Bonds” or the “Bonds”) is exempt from Federal and Puerto
Rico income taxes for bona fide residents of Puerto Rico and local corporations
 The Puerto Rico tax-exempt market, accessed through the issuance of AFICA Bonds, is one of the
lowest cost dollar sources of capital in the world
 The primary investors for AFICA Bonds issued in Puerto Rico include individuals, local mutual
funds, local corporations, and financial institutions
 The AFICA market generally requires an investment grade rating on the Bonds
Source: The Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority (AFICA)
and UBS Financial Services Inc. of Puerto Rico.
Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice.
42
Financing Alternatives - AFICA
Benefits and Considerations of AFICA Financings
Advantages
•
Tax-exempt 30-year fixed rate debt provides maximum interest rate protection
•
Maximum annual debt service is usually lower than commercial loans
•
Provides for a 30-year amortization schedule
•
Financing funded at issuance for all the projects
Disadvantages
•
Higher interest cost than current floating rate based loans
•
Timing: potentially longer process
•
Disclosure requirements
•
Annual rating agency maintenance fees
Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice.
43
Historical AFICA Transactions with UBS Participation
AFICA allows financing to a broad spectrum of industries and sectors including Universities,
Shopping Centers, Hotels, Industrials, Office Buildings, Hospitals…
Caparra Hills, Inc.
$59,649,744.50 - AFICA
Industrial Revenue Refunding Bonds, 2011 Series A
(Galeria Tower at San Patricio Project)`
LeadManager
Caparra Hills, Inc.
$52,230,680 - AFICA
Industrial Revenue Bonds, 2002 Series A
(Galeria Tower at San Patricio Project)
LeadManager
$130,000,694 - AFICA
Industrial Revenue Bonds, 2001 Series A and B
(El Nuevo Dia Project)
Lead Manager
(University of the Sacred Heart Project)
Lead Manager
$38,335,000 - AFICA
Tourism Revenue Bonds, 2000 Series A
(Costa Sur Golf & CC and Ponce Hilton Project)
Co-Manager
$19,000,000 - AFICA
Tourism Revenue Refunding Bonds, 1998 Series A
(The Hampton Inn & Suites Project)
Co-Manager
$86,290,000 - AFICA
Tourism Revenue Bonds, 2000 Series A
(Paradisus Coco Beach Resort Project)
Joint Lead Manager
$38,400,000 - AFICA
Tourism Revenue Bonds, 2000 Series A and Series B
(Embassy Suites Hotel & Casino
San Juan Project)
Co-Manager
$37,615,000 - AFICA
Industrial Revenue Bonds, 2002 Series A
(Humacao Judicial Center Project)
Joint Lead Manager
$26,225,000 - AFICA
Industrial Revenue Bonds, 1998 Series A
(Edificio Corp. del Fondo del Seguro Carolina Project)
Joint Lead Manager
$25,130,000 - AFICA
Higher Education Revenue Bonds, Series 2001
$75,330,000 - AFICA
Tourism Revenue Bonds, 1999 Series A
(Cayo Largo Inter
-Continental Beach Resort Project)
Co-Senior Manager
$30,000,000 - AFICA
Tourism Revenue Bonds, 2000 Series A
(Palmas del Mar Country Club Project)
Lead Manager
Ashford Presbyterian Hospital
$146,584,370 - AFICA
Tourism Revenue Refunding Bonds, 1998 Series A
(The Westin Rio Mar Beach Resort Project)
Joint Lead Manager
$27,130,000 - AFICA
Tourism Revenue Refunding Bonds, 1998 Series A
(Martineau Bay Resort Project)
Co-Manager
$26,225,000 - AFICA
Industrial Revenue Bonds, 1997 Series A
(Ashford Presbyterian Hospital Parking Project)
Lead Manager
44
Case Study – AFICA Financing Sample
Example of a $300 million AFICA Bond Financing
Sources & Uses
AFICA Structure
Sources:
Bond Proceeds:
Par Amount
$
$
307,315,000
307,315,000
$
300,000,000
Uses:
Project Fund Deposits:
Construction Project
Delivery Date Expenses:
Cost of Issuance
Underwriter's Discount
AFICA Fee
400,000
3,841,438
3,073,150
7,314,588
Other Uses of Funds:
Additional Proceeds
$
413
307,315,000
Bond Summary Statistics
AFICA Bond Par Amount
Average Bond Coupon
All-In TIC
Average Life
Max Annual Debt Service
Average Takedown
AFICA Fee
Expected Credit Rating
Bond Components
Security
$307mm
6.22%
6.47%
19.6 years
$22.72
1.25%
1.00%
BBB
Par Value
(US$ mm)
Serial Bond due 2021
Term Bond due 2026
Term Bond due 2031
Term Bond due 2036
Term Bond due 2041
$
53.0
38.5
51.6
69.6
94.7
307.3
Price
(US$)
100
100
100
100
100
Average
Average
Life
Coupon (years)
4.973%
5.950%
6.100%
6.300%
6.400%
5.9
13.1
18.1
23.1
28.1
19.5
45
Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice.
Case Study - Dorado Beach Resort
$342 million Note Purchase and Credit Agreement
Asset Overview


Financing Structure
The issuer DBR Dorado Member, LLC is a company formed in
Puerto Rico effectively controlled by D.E. Shaw and Caribbean
Property Group
– Organized for the sole purpose of acquiring, developing,
constructing and operating the property
Dorado Beach is expected to be a 347 acre ocean-front resort in
Dorado, Puerto Rico
– Hotel Component: 110-rooms, a 18,000 sq ft reception building
with a restaurant and spa facilities
– Club Component: full restoration of the Dorado Beach Golf Club
(36-holes in the aggregate)
– Condo-Hotel Component: 13 “Ritz-Carlton Reserve”-branded
units
TDF Guarantee
Senior Credit
Facility
Senior Notes
$166 mm
Equity
Contributions
$110mm
$65 mm
DBR Dorado
Member, LLC
Construction / Operation
D.E. Shaw
75%
CPG
25%
Dorado Beach Resort
Transaction Overview
Sources and Uses of Funds

$342 million Project delivered on July 14, 2010

$231,132,813 Note Purchase and Credit Agreement, guaranteed by
the Tourism Development Fund (TDF) structured as follows:
– $166,132,813 Senior Notes acquired by UBS Funds (forward
commitment purchase of investment grade notes)
– Rate: 3-Month LIBOR plus 4.50%, (min. 6.25% per annum)
– $65,000,000 Senior Credit Facility acquired by FirstBank and
Government Development Bank for Puerto Rico (GDB)
$110,571,256 in Equity contributions structured as follows:
– $69,839,250 in land and cash contributions
– $15,000,000 in capital contributed by Hotel Development Corp.
– $25,642,006 in local tax credits
UBS Financial Services Incorporated of Puerto Rico acted as sole
placement agent of the $166 million Notes


Sources
Senior Debt (GDB & FirstBank)
Senior Notes (UBS Funds)
Equity (Land)
Equity (Cash)
HDC Contribution
Local Tax Credits
Total Sources
Uses
Land and Hard Costs
FF&E
Soft Costs
Financing Costs and Contingency
Total Uses
$ mm
65.0
166.1
37.8
32.2
15.0
25.6
$ 341.7
%
19.0%
48.6%
11.1%
9.4%
4.4%
7.5%
100.0%
$ mm
$ 217.0
26.5
35.8
62.4
$ 341.7
%
63.5%
7.8%
10.5%
18.3%
100.0%
$
46
Note: UBS Financial Services Incorporated of Puerto Rico does not provide legal or tax advice.
SECTION 5
Local Financing Alternatives
FHA Section 242 Program (HUD Guarantee)
FHA Section 242 Program (HUD Guarantee)
Overview
 The Federal Housing Administration ("FHA") was created in 1934 in response to the effects of the
Great Depression
–
–
–
–
–
The housing market was flat on its back
2 million construction workers were unemployed
Home mortgages were limited to 50% of the market value
Amortization was three to five years with a balloon payment
Only 40% of US families owned their own homes
 FHA contributed significantly to the US recovery and gave the financial markets some key features
we have become accustomed to
–
–
–
–
25 to 30 year loan amortization
Level annuity debt service payments without balloon
Very little, or no down payment
Flexibility in calculating household income and payment ratios
 World’s largest mortgage insurer with 33 million properties insured
 FHA was merged into the newly created Department of Housing and Urban Development ("HUD")
in 1965
 FHA is administered by the Assistant Secretary for Housing: The FHA Commissioner
 The FHA insurance multi-family programs are self sufficient, paying for their operation from
mortgage insurance receipts and maintaining their own default reserves
48
FHA Section 242 Program (HUD Guarantee)
Overview
 The FHA hospital mortgage insurance program began in 1968
 The program has insured over 325 hospital mortgages for a total value of over $9.8 billion
 Mortgagors range from small, stand-alone Critical Access Providers, to major teaching institutions
such as Columbia Presbyterian and New York Cornell Medical Center in New York City, to
governmental institutions such as the Medical University of South Carolina, and University of New
Mexico
 Uses for FHA insured mortgages:
–
–
–
–
–
Construction financing, to include
Expansion
Modernization
Replacement
Equipment
 Refinancing (tax-exempt or taxable) of existing debt
– Current refunding of taxable and tax-exempt loans
– Advance refunding of prior bonds
– Tender or Exchange of prior debt instruments
49
FHA Section 242 Program (HUD Guarantee)
HUD Guarantee Program
 HUD has operated since the mid-1970’s as a mortgage insurance program for acute care hospital,
both public and private
 The HUD insurance program is non-recourse to the sponsor
 HUD can insure up to 90% of the replacement cost of the project
Bond Issuing
Authority
Mortgage/
Leasehold
Hospital
Project
Bond Investor
50
FHA Section 242 Program (HUD Guarantee)
Historical Local FHA (242) Hospital Transactions
Hospital
Hospital Santo Asilo de Damas
Hato Rey Communnity Hospital
Hospital Hermanos Melendez
Hospital San Pablo
Hospital Auxilio Mutuo
Hospital Dr. Pila
Turabo Medical Center
Mennonite General Hospital
Total
Date
8/14/1973
1/31/1974
6/27/1979
1/19/1982
5/27/1983
2/14/1985
4/12/1985
12/21/2009
Mortgage
Amount
City
Ponce, PR $
6,000,000
San Juan, PR
12,459,100
Bayamon, PR
12,708,100
Bayamon, PR
16,879,055
San Juan, PR
3,175,000
Ponce, PR
16,816,570
Caguas, PR
41,100,000
Cayey, PR
130,000,000
$ 239,137,825
Source: Federal Housing Administration website – 9/14/09:
http://portal.hud.gov/portal/page/portal/FHA_Home/lenders/lenders_health_care_facilities/about_clients .
51