HCP, a US-listed healthcare property fund, was the lead investor in the £175 million unsecured sub-tranche of the £525 million debt package that funded Terra Firma’s £825 million acquisition of the UK’s largest elderly and specialist care provider Four Seasons Health Care.
HCP, which is a fully integrated real estate investment trust (REIT), acquired loan notes with an aggregate par value of £138.5 million, discounted to £136.8 million.
The notes have a fixed coupon rate of 12.25% per annum (12.5% when discount taken into account) and, following Terra Firma’s £345 million equity injection, represent a loan-to-capitalisation rate of 62%.
The notes are subordinate to approximately £390 million of other debt, comprised of £350 million of senior secured debt and £40 million available to Four Seasons under a secured revolving credit facility.
The notes have an eight-year term and are non-callable for four years, subject to customary redemption provisions.