Barchester Repays Debt After Sale-Leaseback of U.K. Care Homes

Barchester Healthcare Ltd., the operator of more than 200 care homes in the U.K., repaid about 900 million pounds ($1.4 billion) of loans less than a month before they were due to mature.

The company paid off the debt in full after selling its properties to a group of investors and leasing them back, according to an e-mailed statement. The deal allows London-based Barchester to continue running the homes for 23 years.

“Our debt has been completely repaid 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 U.K.,” Margaret Ford, Barchester’s chairman, said in the statement.

Barchester obtained about 970 million pounds of loans in 2006, according to data compiled by Bloomberg. The debt, organized by Royal Bank of Scotland Plc and backed by 160 care homes, included a 572 million-pound senior loan packaged into Epic (Barchester) Plc commercial mortgage-backed securities, the data show.

The debt shrank to 900 million pounds at the end of June and was due to be repaid on Sept. 30, according to a report on RBS’s website. Liabilities associated with interest-rate and inflation swap transactions linked to the debt totaled more than 400 million pounds, while the care homes were valued earlier this year at about 1.2 billion pounds, the report shows.

HCP Inc., the U.S. real estate investment trust, this year invested 109 million pounds in a part of the debt ranking lower than the CMBS, Paul Gallagher, HCP’s chief investment officer, said in a July 30 conference call.

Parts of Barchester’s junior debt backed last year’s Isobel Finance No. 1 CMBS, Bloomberg data show.