Fitch Ratings recently upgraded the junior bonds of two sale leaseback nursing home securitizations - U.K. Care No. 1 and PHF 1 Securities No. 1. The rating agency cited improvements in operating performance. Fitch also affirmed the junior Class B and Class M notes of Tiara Securities Issuer B.V. at BBB+' and A+', respectively. The Class A notes of the transaction were affirmed at AAA'.

There are six sale leaseback transactions of U.K. care homes outstanding backed by three different originators - BUPA, NHP and Four Seasons. Under the sale leaseback structure, the property company as a borrower issues notes via an issuer SPV and uses the proceeds to buy the freehold or long leasehold interests in care home properties. It then leases back the care homes to the operators (either in-house or third-party) and receives a rental or lease payments sufficient to service the debt. Fitch said that all of the outstanding transactions also benefited from a zero-coupon swap placed with a AAA'-rated counterparty for the redemption of senior note (and junior note in the case of Care Homes) principal at maturity.

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