Beijing-based private equity firm Cindat Capital Management has announced a joint venture with US healthcare REIT Omega Healthcare Investors to buy up the remaining interest in a portfolio of 67 UK senior housing properties .
The Cindat–Omega joint venture paid $232 million to acquire a 49 percent interest in the portfolio from NYSE-listed healthcare REIT Healthpeak Properties during the third quarter of this year, according to the healthcare real estate specialist’s financial report from the period.
The acquisition, which includes the JV taking on responsibility for a development loan on a newly constructed UK care home included in the portfolio, comes a year after Cindat had paid an undisclosed amount to acquire a 51 percent interest in the same portfolio.
An enquiry from Mingtiandi to Cindat Capital Management regarding details of the split between the parties involved in the partnership had not been answered at the time of publication.
Omega, which is also NYSE-listed announced separately in its third quarter results that it had paid $90 million for its undisclosed interest in the JV.
Finding Opportunity in Brexit-challenged UK
With the UK government projecting that 24 percent of the nation’s population will be aged 65 or older by 2042 (up from 18 percent in 2016), the senior housing portfolio provides its new owners with 3,500 beds across the UK, with the bulk of the properties spread widely across England.
“With solid fundamentals driven by aging demographics and the supply demand imbalance, coupled with a temporary dislocation in the market created by the political landscape, we believe the UK’s senior care sector represents an attractive long-term investment opportunity,” said Allan He, the senior partner at Cindat Capital Management.
Located in London, Leeds and Manchester, as well as other major and regional cities in the United Kingdom, the primarily purpose-built facilities were mainly completed post-1990, with the newest having opened in 2012.
The properties are let to UK care home operators HC-One and Maria Mallaband Care Group under long-term leases that are bound by retail price index-linked rent escalators subject to a cap and collar, according to Cindat.
Targeting the Care Home Sector
“We have a significant appetite for investing in the UK care home space and will seek to continue to build our platform as we look to capitalize on our pipeline of future opportunities,” said Cindat’s managing director and head of healthcare, John Stasinos. “We are excited about our partnership with Omega, a leader in health care real estate and an experienced investor in the UK.”
Stasinos foresees Cindat, which is affiliated with state-run “bad bank” China Cinda Asset Management, moving into a larger role in the UK’s senior housing market. “We feel that we are poised to be the leading capital provider to the UK senior care sector,” Stasinos said.
As of June 30 2019, Cindat managed $2.5 billion of assets, including $9 billion in value across 22 portfolio investments located in the United States, the UK, and Asia Pacific.
Omega’s exposure to UK care homes represents roughly 5 percent of its global $9 billion in properties, with the addition of the Healthpeak UK portfolio bringing its total number of assets in the UK to 122.
Picking Off UK Assets in Troubled Times
For Cindat, the acquisition comes as the latest in a steady stream of UK deals for the company run by former Merrill Lynch banker Greg Peng.
Just six months ago, the firm teamed up with super-investor Howard Marks’ Oaktree Capital Management to acquire London’s 30 South Colonnade from China’s financially challenged HNA Group, with reports putting the transaction price at £135 million.
Cindat and its partners on that deal, which included London-based Quadrant Estates, are understood to have picked up the 305,000 square foot (28,335 square metre) office building, which is currently occupied by Thomson Reuters, at a steep discount to market rates.
A year and a half before that deal, in October 2017, the firm reportedly partnered with London’s Aprirose on the £525 million acquisition of UK hospitality chain Qhotels from Bain Capital Credit.
Cindat is reported to have taken a 50 percent stake in the Qhotels portfolio, which comprises 26 five and four star regional hotels in Leeds, Manchester, Glasgow and other UK cities.