Barchester finalises leaseback agreement for 200 British care homes

Deal provides company with finance to repay about £900 million of loans

Barchester Healthcare, the British nursing homes operator backed by several senior Irish business figures, has finalised a sale and leaseback of some of its 200 British care homes.

The company paid off the debt in full after selling its properties to a group of investors and leasing them back, according to an emailed statement.

The deal has provided it with finance to repay about £900 million of loans less than a month before they were due to mature.

Barchester is backed by investors including JP McManus, John Magnier, Dermot Desmond and Denis Brosnan, the former chief executive of Kerry Group.

According to a statement from the company, it sold the care homes to a group of "private real estate investors" called Ravenshill International. Reports yesterday in the trade press linked Ravenshill to some of the existing Barchester investors, but this could not be confirmed.

When asked by The Irish Times about the identity of the buyers and if they were linked to Barchester, the company said: "They do not want to be identified."

A Barchester spokeswoman was also unable to say where Ravenshill was incorporated or who its advisers were. No company operating under the name Ravenshill International is registered in Ireland or Britain.

23 years
The sale and leaseback allows Barchester to continue running the homes for 23 years.

"Our debt has been completely repaid," said Barchester chairwoman Margaret Ford, "and we now have the operational stability and financial flexibility to continue making improvements to what is already the highest quality portfolio of care homes in the UK."

Other directors include John Bateson, an associate of Dermot Desmond, and Edward Irwin of Mr Magnier's Coolmore Stud.

Barchester obtained about £970 million of loans in 2006.

The debt, organised by Royal Bank of Scotland and backed by 160 care homes, included a £572 million senior loan packaged into Epic (Barchester) commercial mortgage-backed securities.

End of this month
The debt shrank to £900 million at the end of June and was due to be repaid at the end of this month, according to a report on RBS's website.

Liabilities associated with interest-rate and inflation swap transactions linked to the debt totalled more than £400 million, while the care homes were valued earlier this year at about £1.2 billion, the report shows.

US real estate investment trust HCP this year invested £109 million in a part of the debt ranking below the CMBS (commercial mortgage-backed securities), Paul Gallagher, HCP's chief investment officer, said in a conference call at the end of July.
– (Additional reporting, Bloomberg)

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