Capio Nears £730 Million Sale Leaseback of 21 UK Hospitals

The Sunday Times - November 19, 2006


APAX Partners and Nordic Capital are understood to be in detailed talks to sell 21 of Britain’s best-known private hospitals to an investment club for an estimated £730m. The club’s investors comprise Sir Tom Hunter, the Scottish retail tycoon, Nick Leslau, the property entrepreneur, HBOS, the bank, and Baugur, the Icelandic group that counts House of Fraser and Hamleys among its investments.

The properties represent the bulk of the UK freehold and long-leasehold properties owned by Capio, the Swedish healthcare company the two private-equity firms agreed to buy for £1.2 billion last month. The transaction would represent one of the biggest sale-and-leaseback deals executed in the UK.

The portfolio includes the Capio Nightingale Hospital on Lisson Grove, northwest London, best known for treating the drug and alcohol addictions of the rich and famous. If the deal goes ahead, the purchasers are considering injecting the portfolio into a £2.5 billion tax-efficient real- estate investment trust (Reit), which could be launched in the first half of next year.

The investor club is understood to have hired Morgan Stanley to advise on the creation of the Reit. It is considering injecting portfolios of property worth £120m from Southern Cross nursing homes, £600m from Punch Taverns, and £500m from Travelodge hotels into the Reit. It is likely to be registered in Luxembourg, but listed in the UK. The assets would benefit from having secure 30-year property leases in place, with fixed rental rises.

Apax and Nordic Capital, which are advised by NM Rothschild and Deutsche Bank, and the investment club declined to comment. Sphere: Related Content