Robust UK Pipeline Pushes HCP to Open London Office

Following HCP, Inc.’s (NYSE: HCP) $630 million debt investment in a United Kingdom senior housing portfolio acquisition, the real estate investment trust (REIT) will be opening an office in London to manage its overseas operations, the company announced during its third-quarter earnings call.

“We are pleased to announce that in January we will be opening a London office led by Andrea Auteri, who will be joining us as senior vice president of acquisitions to help us manage and build on our active deal pipeline in the UK,” said President and CEO Lauralee Martin.

Auteri joins HCP after having spent more than a decade at Goldman Sachs, where his responsibilities included coverage of the UK and European financial sponsors and health care operator landscape.

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“So one of the attractions to Andrea is that he has been in this space on the other side of house, clearly knows what the opportunities are there and saw the HCP platform as the way he could execute them,” Martin said.

HCP, the third-largest health care REIT in the country, announced Monday that it is the lead investor in the financing for Formation Capital and Safanad Limited’s pending acquisition of NHP, which owns 273 nursing and residential care homes representing more than 12,500 beds in the UK.

The REIT’s UK portfolio now totals $1 billion and is “anchored by significant relationships with three premier care home operators: Four Seasons Health Care, Maria Mallaband, and HC-One,” Martin said.

“What we have right now, we’ve got a billion dollars in our [UK] platform, which is a good base to be running from,” said Paul Gallagher, HCP executive vice president and chief investment officer. “And quite frankly, we’ve got a very robust pipeline over there of opportunities. So we saw the need to have boots on the ground and then to be active in the marketplace.”

When asked just how big HCP’s UK pipeline is, Chief Financial Officer Tim Schoen responded, “We’ve got a robust pipeline.”

The closing of Formation Capital and Safanad Limited’s acquisition of NHP, in addition to HCP’s funding of the loan facility, is expected to occur in November 2014, subject to customary closing conditions.

The NHP portfolio is anchored by 226 care homes, which are operated by HC-One, an NHP subsidiary launched in November 2011 to assume the operations transitioned from Southern Cross Healthcare. The remaining NHP facilities are leased to third-party operators including Four Seasons Health Care and Care Management Group.

HCP sees its relationship with HC-One potentially shifting in the future, eyeing a possible leaseback transaction.

“We see an opportunity with our capital plan and working with the HC-One folks and Dr. Chai Patel [chairman of HC-One] to get these assets turned around … and get operations back up running,” Gallagher said. “We see an opportunity to be able to convert possibly some of our debt positions into a sale-leaseback, and we do have a right of first offer for any future financings on those particular assts.”

Including the $630 million UK debt investment, HCP has completed and committed $2 billion in investments year-to-date.

Written by Emily Study

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