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NHP owners shake hands on £477m deal

US private equity firm Formation Capital, investment firm, Safanad, HCP and Court Cavendish have agreed to acquire NHP, the owner of care home group HC-One, for a consideration of £477 million.

In total NHP owns 275 nursing and residential care homes, representing over 12,500 beds in the UK. The portfolio includes the 226 care homes that are operated by HC-One, which was created in November 2011 as an NHP subsidiary to encompass the properties transferred to NHP following the collapse of Southern Cross. Turnaround firm Court Cavendish, founded and chaired by Chai Patel, was appointed to manage HC-One.

HCP will provide a loan facility of £394.5 million, secured against NHP’s assets with a five-year term. £362.5 million of this facility will be funded at the closing of the deal, with the REIT providing up to £32 million to fund future capital improvements in HC-One operated properties.

The deal brings total recoveries to creditors of £507 million over the last five years, according to a statement from NHP.

The news comes after the sale process was stalled due to resistance from some of NHP’s bondholders.

According to a statement released by NHP, the new owners are planning to back the company in acquiring further homes and diversifying into retirement villages and home care.

Jeremy Jensen, chief restructuring officer at NHP, said: “This business has found a good home with a responsible owner who will continue to invest in its future.

“I would like to thank our lenders for supporting the business with over £90 million of investment over the last three years and all those involved in achieving this turnaround.

“We leave the business in excellent hands, with the future for residents and staff assured.”

Formation Capital president Steve Fishman (pictured), said: “HC-One has come a long way since Court Cavendish stepped in to rebuild the operations. Dr Chai Patel, his management team and staff have worked exceptionally hard to bring a new focus in the organisation around care for residents. The transaction brings an end to the uncertainty HC-One has faced, enables significant new investment and consequently allows the HC-One team to better serve residents and their families.

"Our investors and partners bring long term capital and significant experience of investing in this sector. Our goal is to enable the continued development of the estate, and development of the HC-One team to the benefit of residents and broader stakeholders.”

Kamal Bahamdan, chief executive of Safanad, added: “We are pleased to have expanded on our successful US partnership with Formation Capital by jointly establishing a healthcare platform in the UK market, and especially encouraged to have equity partner Dr. Chai Patel and his team at Court Cavendish as part of our strategic vision to further build on this opportunity.”

Formation Capital has invested over $5.5 billion into senior housing and care, post-acute services and healthcare real estate since 1999.

Safanad is a principal investment firm that invests in real estate, private equity and public markets. It formed a strategic partnership with Formation Capital in 2009 that saw both acquire over $3 billion of senior healthcare assets.

A team led by Karima Hudson at Wragge Lawrence Graham advised Formation Capital on the deal. Pinsent Masons and Christie + Co advised Court Cavendish, Field Fisher and Skadden advised HCP, Eversheds and White & Case advised NHP and Ashurst advised Safanad.

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Posted on: 04/11/2014

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