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Capital Markets

Whole-business securitization: The mystery of Theatre

Latest securitization refinancing of GHG healthcare group is a puzzlingly complex hybrid deal that will be largely retained by arranger Barcap.

"Typically, rental payments from healthcare properties are more operations dependent than in standard CMBS. Thus, we treat this transaction as a whole-business securitization" Guillaume Langellier, Fitch Ratings

The hospitals backing GHG healthcare’s Theatre (Hospitals) transaction, which was launched last month, should be pretty familiar to the ABS market by now; this is the third time they have been securitized. The first deal was subsequently refinanced (and then withdrawn) to be replaced by this latest structure, the product of South African healthcare group Netcare’s acquisition of GHG in April 2006 for £2.2 billion ($4.4 billion). As soon as the buyout became public, an opco/propco refinancing was on the cards – not least because the leverage in the GHG Finance deal was comparatively low and because London & Regional Properties was a member of the winning consortium (along with Apax Partners and Brockton Capital). The deal that has eventually emerged is indeed based on opco/propco principles, but has been a long time coming and involves a puzzlingly complex structure. Even the most cursory glance at the deal raises questions – not least why it has two issuers (which are identical from a structural standpoint) plus an additional group of senior lenders – which means that the borrower is repaying loans to three different groups of senior lenders.

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