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Capital One Tops List of Lead Arrangers of Leveraged Loans to Healthcare

January 09, 2018, 07:26 AM
Filed Under: Healthcare

Capital One Healthcare’s Corporate Finance group has been named the No. 1 lead arranger for healthcare leveraged loans up to $1 billion, according to Thomson Reuters. The corporate finance team closed 54 transactions in 2017. Capital One Healthcare, which provides both corporate and real estate finance, closed 140 transactions in total.

“The changing demographic landscape and a stable economic climate continue to create opportunities for healthcare companies and investors, said Al Aria, Senior Managing Director, Capital One Healthcare Corporate Finance. “Our team remains deeply committed to supporting their efforts.”

Capital One Healthcare is active across a broad range of healthcare sub-sectors—including long-term care, pharmaceuticals, medical devices, hospitals and outpatient services, healthcare IT, and medical properties—financing acquisitions, recapitalizations and working capital needs.

Below are details on the market trends within each healthcare segment and examples of noteworthy 2017 transactions.

Corporate Finance
“This was an exceptional year for the leveraged loan market,” Aria said. “There were no major shocks to disrupt the market within the span of the year, and as a result, investors benefited from ample liquidity.” Collateralized loan obligation (CLO) issuance was up strongly this year, and the number of new private funds dedicated to providing leveraged loans to the market increased substantially.

“Our ability to capitalize on these excellent market conditions is a testament to the breadth of our products and the depth of our expertise,” Aria said. He noted that in the year since Capital One introduced its unitranche product, the number of unitranche transactions closed has grown steadily, as healthcare investors found its combination of certainty of execution, simplicity and speed especially compelling.

The Corporate Finance team provides private equity and corporate customers with deep industry expertise in all aspects of healthcare financing, including acquisition, refinance and working capital.

In May, Capital One served as the agent, joint lead arranger and sole bookrunner for a $250 million senior credit facility—consisting of a $125 million cash-flow-based revolver, a $45 million term loan, and an $80 million delayed-draw term loan—for Addus HomeCare. This facility allowed Addus to continue to expand in new and existing markets and to capitalize on the shift of dual-eligible patients to managed care plans through both organic growth and acquisition.

Real Estate
On the real estate side, the strong multi-year run for the medical office market continued in 2017—and included another outstanding year for Capital One. “The year was noteworthy for the number of very large medical office transactions” said Jim Seymour, Senior Managing Director of Capital One Healthcare’s Real Estate team. “At the same time, we saw the emergence of institutional investors as an important market force. Our ability to serve these larger clients with increasingly sophisticated medical properties financings continues to fuel our growth.”

The seniors housing and care space continued to present opportunities for investors in 2017 amid significant short-term uncertainty, particularly in the post-acute sector. This uncertainty manifested itself in fewer new investment and lending opportunities in 2017, and we expect this uncertainty in post-acute will carry over into 2018.

“Despite some headwinds, our team had a very productive year for new seniors housing loan originations, which we attribute primarily to our newly introduced single sales force model,” said Seymour. “Our team now represents all Capital One debt product offerings—balance sheet, Fannie Mae, Freddie Mac, and HUD—enabling us to better serve our clients.”

The real estate finance team provides customized solutions to the medical properties and seniors housing and care sectors. Products include first mortgages, interim financing and acquisition financing for healthcare investors, operators, and developers, as well as a full spectrum of banking products for healthcare REIT clients.

In September, Capital One provided two loans—a $251 million bridge loan and a $300 million Freddie Mac seniors housing revolving credit facility—to Kayne Anderson Real Estate Advisors (KAREA), enabling it to purchase Sentio Healthcare Properties, a public, nontraded REIT. The team delivered a one-stop-shop financing solution for this complicated acquisition on a transaction that solidified Kayne’s position as a leading investor in the seniors housing space.

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