Care and supported housing portfolio finance

How is a care portfolio financed differently from a single asset?

The defining feature is cross-collateralisation. Instead of separate loans on each asset, a portfolio facility takes security over all of them and sets covenants at platform level, a portfolio loan to value across the blended valuations and a portfolio cover test on combined income. A strong, stabilised care home or a well-let supported-housing scheme can carry a weaker or newer asset, which is impossible when each asset stands alone behind its own loan.

Portfolio facilities also behave differently in operation. Substitution and release mechanics let the owner sell an asset and release it from security against a partial repayment, accordion tranches pre-agree additional debt for future acquisitions, and capex tranches fund works, refurbishment and re-registration across the group. For a growing platform these mechanics matter as much as the headline rate, because they decide whether the facility helps or hinders the next deals. We structure these terms against the owner's pipeline at the outset.

How do lenders underwrite a mixed care and supported-housing portfolio?

A mixed portfolio is underwritten strand by strand before it is blended. The care homes are assessed as operating businesses, on EBITDARM, occupancy against the 88.7 percent national benchmark on the Knight Frank 2025 review, fee mix and CQC ratings. The supported-housing assets are assessed as lease-backed investments, on the leases, the indexation and the registered-provider covenants, with the Regulator of Social Housing's view of those providers central.

Only once each strand is understood does the lender build the platform picture: the blended loan to value, the combined cover, and the balance between trading risk and covenant risk across the group. A portfolio weighted toward stabilised care and strong-provider leases reads more favourably than one carrying turnaround homes and weak providers. We present each strand in its own terms so the lender is not asked to underwrite a care home as if it were a lease, or a lease as if it were a trading business.

How much can a care or supported-housing portfolio borrow?

Indicatively, portfolio facilities run from around £3m for a small regional group to £75m and above for larger platforms, with leverage up to around 60 to 70 percent of the blended valuations and term rates from around 6 percent. The blended figure masks asset-level variety: a mature, well-occupied care home or a strong-provider supported-housing scheme supports more debt than a turnaround home or a property tied to a weak provider.

The binding test is usually portfolio cover on the combined income. Lenders model the platform's blended income after central costs, stress the occupancy, fee and void assumptions, and set the facility where cover holds through the stress case. A portfolio carrying turnaround or lease-up risk is sized more conservatively than its asset value alone suggests, sometimes with leverage stepping up as those assets mature. Where an owner wants more than senior lenders will provide, we layer mezzanine debt or joint venture equity above the senior facility, refinanced out as the platform's income grows.

Share purchase or asset purchase: how does deal structure affect the debt?

Acquiring a care or supported-housing group raises a structural question early: buy the company, or buy the assets out of it. A share purchase takes the operating or investment company whole, with its homes or properties, registrations, provider relationships, staff and history, and the debt is raised against the group with lenders underwriting the company as well as the assets. An asset purchase lifts the homes or properties into the buyer's own structure, which simplifies the lender's security but can complicate the transfer of CQC registrations, staff and provider leases.

On care assets the CQC registration position is central, because a registration does not simply transfer and the buyer must be registered to operate, which the funding timetable has to allow for. On supported housing the provider leases and any nominations agreements need to carry across cleanly. Tax usually drives the seller's preference and price, so the funding structure has to work with the deal the parties will actually sign. We bring lenders in early enough that the financing and the purchase structure are designed together, and on larger deals we introduce equity and joint venture partners alongside the senior debt.

Can you refinance a portfolio to fund further acquisitions?

Yes, and for most growing owners the portfolio refinance is the engine of expansion. As care homes mature and EBITDARM grows, or as supported-housing leases season and indexation lifts the rent, the blended valuation rises, and a refinance at the same portfolio loan to value releases equity to fund the next acquisitions. Run repeatedly, this cycle lets an owner grow a platform substantially without fresh outside equity at every step.

Structure makes the cycle smoother. An accordion tranche pre-agrees additional lending capacity that draws as assets are added, avoiding a full refinance for every deal, while capex tranches fund works and re-registration inside the existing facility. When a platform outgrows its lender, a full refinance into a larger facility, sometimes with a club of lenders, resets the capacity for the next phase. We manage these refinances end to end, assembling the asset-by-asset pack, running the lender process competitively, and negotiating the release pricing, substitution rights and accordion terms that decide how useful the facility is over its life.