PRESS RELEASE
BEI/12/185
Brussels, 3 December 2012
Finance contractforthe construction of a new hospital
Signature by the European Investment Bank, the Common Community Commission(COCOM)and Chirec
The European Investment Bank (EIB) is helping to financethe construction of a new sustainable hospitalinBrussels. The finance contractwas signed today by the three partners (the EIB, COCOMandthe Chirec Hospital Group). The work onthe newhospitalwill commence in 2013 and be completed in 2017.
The newhospital, a passivebuildingfor theChirec Hospital Group, will be built onthe Delta site onboulevard du Triomphein Auderghem. Chirec is a private groupcreated from the merger of smallerhospitalsinBrussels over the past 15years. The Group is currently spread over four sitesinBrusselsand onein the Walloon Region.
Cost
The cost of thenewhospitalis estimated atEUR282millionand will be financed by a EUR50millioncontribution from own funds, a loan from traditional banks (KBC, ING, Belfius, BNP Paribas) and EUR100millionfrom the European Investment Bank. The European loan is expected to be for a term of 20years.
COCOMwill guaranteethe amount borrowed fromthe EIB.
European Investment Bank
This is the first time that ahospitalinBrusselshas entered into a loan contract withthe European Investment Bank. Providing finance for the construction of hospitalsis part of its remitto support "human capital". Three hospitals are currently being examined bythe EIB: one that comes underthe Flemish Community, a second one inthe Walloon Region and a third, the Chirec inBrussels, which comes under theCommon Community Commission. Other hospitalscould also seek a contribution fromthe EIB.
EIBPresident Werner Hoyer said at the signing ceremony: "I am delighted thatthe EIBis able to contribute to this major hospital project because of the benefits it will bring to patients, staff, the community and the Region. BrusselsCapitalwill have a state-of-the-art establishment that, as well as helping to revitalisethe area concerned and give the local economy a boost, will serve as an example in terms of energy efficiency and showing concern for the environment, which is also of crucial importance to our institution. In today’s Europe investment in human capitalis a major driving force for growth and development, and we are glad to be able to support you in this initiative".
Why was it necessary to approachthe EIB?
The financial crisis, which intensified during the summer of 2011 with the tension on the market over sovereign debt in Europe, has for a number of months been a source of concern for hospitals. The liquidity and refinancing constraints that are currently affecting banks have led most of them to cut back on lending or even to withdraw completely from the market. This has meant that for some months insufficient finance – both short and long-term – has been availableto meet the needs of hospitals as a whole and that there has been an increase in the rates offered owing to the higher cost of access to liquidity and a reduction in the repayment periods for new loans. The prospect of new “Basel III” rulesfurther limits the ability of banks to finance a sector which – despite the fact that investment is expected to contract – will still need to borrow substantial amounts,traditionally over long periods.
The Deltahospital project
Chirec currently operates hospitals on fivedifferent sites (fourinBrussels and one inWalloon Brabant), as well as amedical centre inBrussels. The plan to bring the Brussels hospitals together on one site was conceived in 2006 after the infrastructure was found to be outdated and extending the hospitals was found not to be an option. In 2017, when thenewhospital is due to open,Chirec will consist of hospitals on three sites (Delta, with 500beds; Ste Anne/St Rémi, with 300beds; and Braine-l'Alleud, with 300 beds) and a number of private hospitals, offering top-quality medical care locallyin modern establishments.
Delta is ideally situated and easy to get to. The newbuildingwill have seven floors (two underground) totalling around 95000 m² and will have room for 500 beds. The hospitalwas designed with patient comfort in mind and will be light and comfortable and easy to move around.Thebuilding’s functionality was studied in detail so that the doctors and all other members of staff will be able to enjoythe best possible working conditions.
According to DrEl Haddad, Chairman of Chirec’s Board, “With the signing of this agreement and thanks toBrusselsCapital Region, COCOM and the various financial partners, Chirec will be able to undertake a large-scale project based on personalisedmedicine with an emphasis on the qualityof the services offered to the patient, in a sustainable environment”.
The involvement of theBrussels Region and COCOM
For Minister-President Charles Picqué: “Providing a strategically located site for an activity that will contribute to the wealth of the urban economy ofBrusselswill enable the Region to put a sector that is essential to the future ofBrussels on a sustainable footing. It will both maintain an activity that provides employment and, by concentrating healthcare facilities on one site, will make it possible to optimise the quality of the services provided. With this operation, the Region is also demonstrating its harmonious management of the area concernedto meet another crucial challenge, namely the growing population. In exchange for the Delta site, the Region will be able to develop onthe Cavell site nearly 17000m2of housing in a residential district that will no longer have to put up with the problems associated with having ahospital as a neighbour”.
“It is important to note that the use of this structure, i.e.the EIB loan backed by a COCOM guarantee, goes beyond the scope of the Chirec project alone and subsequentoperations that areeligible for EIB loans in the Brussels Region will of course be able tobenefit from it, which of course could be crucial in a context where commercial banks are withdrawing fromlong-termfinancing operations involving hospital-related and other types of infrastructure, in particularbecause of the increased capital requirements. This project can be considered to be a groundbreaking one”, commented Health MinisterBenoît Cerexhe.
“Here we have a good example of sound hospital management”, as MinisterGuy Vanhengel pointed out, “What is involved is bringing a group of hospitals together on one site, i.e. of rationalising the situation. This entails not only economies of scale, but also the possibility of reducing the number of traditional beds and increasing the number of daycare places. The site the newbuildingwill occupy is not only vacant but was also owned by theBrussels CapitalRegion. The newhospitalwill contribute to the provision of high-quality medical care inBrussels, a field in which, incidentally,Brussels excels, although this is often not sufficiently recognised.”
MrVanhengel also stressed that he supports all hospital groups, irrespective of ideological or philosophical considerations.
Note toeditors:
The European Investment Bank
The European Investment Bank (EIB) is the long-term lending institution of the European Union and is owned by the EU Member States. It makes long-term finance available for high-quality investment in order to contribute towards EU policy goals.
Supporting “human capital” formation (the health and education sectors) has been one of the EIB’s priority objectives since 1997. The loans it provides for the health sector in particular are intended to improve the social and urbanenvironment and create sustainable communities. In some cases they also contribute to the development of the knowledge economy, another of the European Union’s flagship policies. Since it has been active in the healthcare infrastructure field, the EIBhas provided loans totalling EUR18.8bn for some 150 projects in the European Union (as at end-2011).
For further information:
Nadya De Beule (MrVanhengel’s office): +32 497.59.99.73
Kathrine Jacobs (MrCerexhe’s office): +32 474.62.40.43
Aude Lavry (MrPicqué’s office): +32 485.16.87.72
Sabine Parisse (EIB): +352.621.459.159
PascaleBerrier (Chirec): +32 475.71.95.30