Investors are awaiting a crucial court judgment which could see the £550m HC-One sale sent back to the drawing board.
Two US investors, Formation Capital and healthcare REIT HCP, are under offer to buy the former Southern Cross homes.
The duo beat competition from Patron Capital, Duke Street, Foundation Healthcare and Fondia Investment Management. Terra Firma, which bought Four Seasons Healthcare for £825m in 2012 – also bid.
Sources close to the process said there was a £200m spread of bids to buy the property company from NHP. It set up care home operator HC-One to take over 241 homes formerly owned by Southern Cross in 2011.
However, the sale could be scuppered by a legal action that has stemmed from a disagreement between bondholders in the portfolio’s securitised debt pile, the £638m Libra loan. That loan was securitised in the £1.1bn Titan Europe 2007-1 CMBS. The class E noteholder – understood to be US hedge fund Anchorage Capital – wants to assert its right to replace special servicer Capita with Mount Street Asset Management, a move that was not supported by the senior noteholders.
Faced with the threat of legal action by the minority bondholder if the appointment was not made, the CMBS trustee applied to the court for directions over “matters of contractual interpretation relating to the applicability and satisfaction of the appointment conditions”.
If the minority noteholders win, and Mount Street is appointed as the new special servicer, it could examine fresh options for the underwater securitisation and call off the sales process.
Sources also said the legal uncertainty has put the potential buyers in a strong position to renegotiate the purchase price.
A ruling is expected early next week. EY and Deutsche Bank are advising NHP.
RAC requirement to be waived?
One of the key issues in this case is whether the requirement that the appointment of a new special servicer is confirmed by all relevant ratings agencies can be waived.
A year ago, Fitch said it would no longer be providing ratings agency confirmations (RACs) on European CMBS transactions.
This means junior lenders, which usually have the right to replace the special servicer on soured loans, may not be able to meet the technical requirements of the trust deed due to the lack of a Fitch RAC.
