Kiwoom Asset provides $45 mn senior loan on Britain’s care homes

Kiwoom Asset Management Co. Ltd. has offered a £35 million ($45 million) senior loan secured against a portfolio of 110 care homes of Britain’s largest care home operator HC-One, in the first investment in a foreign senior care facility by a domestic institution.

The debt facility was provided on behalf of two South Korean institutional investors as asset managers are seeking to diversify portfolio into sectors that reflect social trends of aging populations and socially responsible investing.

It is part of a £195 million refinancing package for the 110 care homes, underwritten by Citibank UK, and Kiwoom provided the loan through the South Korean unit of Citibank in late July, according to investment banking sources on August 6.

The refinancing amount represents a loan-to-value ratio of about 50%. The 110 care homes can accommodate 9,000 residents and make up about a quarter of 400 elderly nursing homes owned by HC-One.

With a term of four and a half years, the senior loan will pay an interest rate of three-month LIBOR based on the British pound plus a premium of 400 basis points for the first two years.

Then the premium rate will go up by additional 60 basis points and the term can be extended, depending on the borrower’s request, according to the sources.

The loan was offered just before the Bank of England raised its base rate from 0.5% to 0.75% for the second time in a decade, pushing the rate to the highest level since March 2009.

Bank of England governor Mark Carney said last week that there would be further gradual rate rises to come, signalling a rise in expected returns from the senior loan.

HC-One, owned by a consortium of investors and Court Cavendish, reportedly racked up at least £500 million debt to acquire care homes in the past few years, including 122 homes from Bupa in 2017 for around £300 million.

The owners put the nursing home provider up for sale for £1 billion as investors’ interest in healthcare assets is increasing, according to media reports in May.

By Daehun Kim

daepun@hankyung.com