Legal & General lends £50m on Sanctuary care homes

Legal & General has provided a £50m, 25-year loan to Sanctuary Group secured against a portfolio of care homes.

The loan, made through LGIM Commercial Lending Limited’s annuity fund, will be used to invest in both Sanctuary’s existing properties as well as the delivery of new housing.

“For us it’s about going into sectors with good long term characteristics,” said Alex Gipson, lending manager at Legal & General.

“For care homes, the long term demographics are very good but we have to be comfortable with the quality of the product, particularly with loans like this where we are lending over 25 years.”

It is L&G’s second loan in the care home sector. Last year, it provided a £51m, 10-year, fixed-rate debt facility to the LNT Group, whose businesses include Ideal Carehomes. That loan, secured on LNT’s 36- strong portfolio of mature UK care homes, refinanced some of LNT’s bank debt, releasing capital to help fund Ideal Carehome’s plans to build six to eight new homes a year.

L&G has invested directly in care homes, forward funding five with Care UK for £31m last year and buying 13 care homes let to Methodist Care Homes for £70m at the end of 2013.

Its annuity fund has invested over £1.2b across 15 deals on term lengths ranging from five years to forty.

Deals include seven loans to the social housing sector, two on student housing, two hotel debt deals and the two facilities on care homes. The latest deal is L&G’s second transaction with Sanctuary.

Sanctuary Group manages around 100,000 homes throughout England and Scotland, including retirement living, student housing, key worker accommodation and care homes.