Capital One announced that its Healthcare Corporate Finance group was once again the No. 1 lead arranger, measured by number of deals, for healthcare leveraged loans up to $1 billion, according to Refinitiv (formerly Thomson Reuters Financial & Risk). The Corporate Finance team closed 80 transactions in 2018. Capital One Healthcare, which provides both corporate and real estate finance, financed more than 175 transactions in total.
Capital One Healthcare is active across a broad range of healthcare sub-sectors—including long-term care, pharmaceuticals, medical devices, hospitals and outpatient services, healthcare IT, and medical properties—financing acquisitions, recapitalizations, and working capital needs.
Below are summaries of the trends that shaped each healthcare segment in 2018.
Corporate Finance
The first three quarters of 2018 benefited from some of the strongest markets ever, which were characterized by aggressive terms and pricing. However, volatility returned in the fourth quarter following the effects of broader markets and record fund outflows.
“Capital One’s ability to continue our market leadership reflects the strengths of our team,” said Al Aria, Senior Managing Director, Capital One Healthcare Corporate Finance. “We are known for the extent of the relationships we have established over the years, the breadth of our experience, which extends to every segment of the healthcare industry, and the stability of our team, which provides investors with confidence in the quality and certainty of our execution in good and challenging markets.”
Aria also pointed to the range of Capital One’s leveraged loan offerings.
“Our unitranche product proved particularly attractive to healthcare investors,” he said. “They found its simplicity, speed, and certainty particularly attractive.”
The Corporate Finance team provides private equity and corporate customers with deep industry expertise in all aspects of healthcare financing, including acquisition, refinance and working capital.
Real Estate
Capital One Healthcare Real Estate also posted strong results in 2018. It was once again a leading lender in the medical properties sector. At the same time, it grew its balance sheet in seniors housing while continuing to grow as a leading Agency lender. The group also launched a real estate unitranche loan program at the end of 2018, which is expected to provide growth in both healthcare and CRE lending in 2019 and beyond. Altogether, it ended the year having closed more than 95 real estate transactions.
“All the trends that have made medical office buildings an increasingly attractive asset class were amply evident in 2018,” said Jim Seymour, Senior Managing Director, Capital One Healthcare Real Estate. “Healthcare providers continue to merge, the shift to new delivery models and outpatient services continues to encourage off-campus development, and most significantly, the population continues to age, requiring more services.”
Seymour noted that the seniors housing market continued to attract investors, drawn by compelling demographics and higher cap rates than other investment types. On the whole, transactions were spread across independent, assisted living, and memory-care communities, while skilled nursing care facilities remained in transition. Both capital providers and operators in this sector continued adjusting to the evolving operating realities.