The Four Seasons debt restructuring took another step toward resolution last week with the announcement that the private equity company Terra Firma will fully acquire the second largest for-profit provider of elderly and specialist care services in the U.K.
Terra Firma will fund the ₤825 million ($1.3 million) acquisition through a mix of equity and new debt.
According to this week’s securitization weekly report from the Royal Bank of Scotland (RBS), the move will allow for full redemption of the Titan 2006-4 FS CMBS deal which includes an A2 tranche that has an accrued overdue interest of ₤11.96 million ($8.03 million). The transaction is backed by a portfolio of care homes owned by Four Seasons.
The securitized loan matures in September 2012. The Titan Europe 2006-4 (FS) transaction notice said that following the acquisition announcement, the borrower intends to repay the securitized loan on or around June 2012, reported Barclays Capital analysts in the bank’s latest securitization weekly.
RBS analysts said that such full take-outs are still rare in CMBS facing maturity walls — restructuring initiatives and enforcements are still the solution of choice — but it highlights “the potential upside in deals with better-quality assets, whether based on tenant cash flows or on operating industries like healthcare, as in the case of Four Seasons.”