Should a conversation with an institution ultimately lead to a decision to invest, there are a number of characteristics that are inherent in every transaction TUFF undertakes.
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TUFF’s 501(c)(3) status facilitates a tax-exempt debt financing based on either the credit of the underlying transaction or TUFF’s own credit. Accordingly, due to its unique structure and success, TUFF was reviewed and rated by Moody’s and Standard and Poor’s as an Investment Grade Credit. Along with lower cost of capital, TUFF combines the resources of the institution to maximize the efficiency of the financing, while avoiding the higher costs of non-traditional debt and equity. In addition, in its twenty-eight year history and through its affiliation with industry organizations like the Association of University Research Parks, TUFF has built lasting relationships with institutions across the country as well as a thorough knowledge of industry best-practices.
- Execution Risk
- TUFF’s investment model removes many elements of uncertainty that frequently keep projects from becoming a reality. By executing a master lease with an Institution, TUFF naturally assumes 100% of the risk inherent in ensuring a successful financing, execution, and delivery of a project.
- Construction Risk
- Should TUFF’s role as counselor ultimately lead to a project investment, TUFF assumes the risk inherent in the construction cycle and will guarantee an on-time and on-budget delivery.
- Interest Rate Risk
- The execution of a master lease naturally precedes a capital event, which means there is an unavoidable risk that interest rates will fluctuate prior to financing; even a miniscule shift can negatively impact the project funds by hundreds of thousands of dollars. Once the terms of the master lease have been agreed upon, TUFF assumes this risk.
- Long-Term Ownership Risk
- Facility Maintenance
- After a construction project has been successfully completed and the facility occupied, risk still remains in the ownership and ongoing operation of the physical asset.
- In the unlikely event of a fire, structural failure, or some other unforeseen circumstance, TUFF’s close partnership with the institution is an important component in the negotiations that inevitably follow.
- Post Issuance Compliance
- Upon the issuance of bonds, there are a number of ongoing obligations as it relates to monitoring the investment performance and complying with the federal tax code. This is especially true when the financing is tax-exempt as the owner is compelled to pay close attention to private activity restrictions and use of funds for qualified purposes. TUFF naturally assumes 100% of the compliance responsibilities, including a detailed record of expenditures, quarterly compliance analysis, record retention policies, monitoring of arbitrage, and annual required disclosure information as it relates to the projects ongoing financial and operating status, among others.