Capital One supports Blackstone healthcare real estate deal

The Virginia-based bank’s Healthcare unit provided $125m in financing towards a $1.1bn mortgage used to support the private equity giant’s healthcare real estate move earlier this year.

The Blackstone Group has taken part in an announced sale of a suite of life science and medical office buildings that the New York-based firm purchased earlier this year in a deal financed in part by Capital One Healthcare.

Capital One Healthcare announced Wednesday (6 July) it provided $125 million of a $1.1 billion first mortgage as part of Blackstone's purchase of BioMed Realty Trust, an $8 billion transaction that closed in March.

Ventas, a medical-focused real estate investment trust, said Tuesday (5 July) it will pay affiliates of Blackstone Real Estate Partners VIII $1.5 billion cash for a set of properties that include the same assets. That sale is expected to close in fourth quarter.

Capital One acted as joint lead arranger and joint documentation agent on the mortgage, for which Citi Group and MUFG Union Bank led the financing. The mortgage helped finance the purchase of 17 life science and medical office buildings spanning 2.2 million square feet in locations that include San Francisco, Seattle and Cambridge, Massachusetts.

A Capital One representative declined to provide more detail on the transaction.

“Because laboratory and biotechnology buildings have such demanding specifications, they are highly capital intensive,” said Capital One's Healthcare Financial Solutions managing director Erik Tellefson in a statement.

Tellefson is part of a former GE Capital Healthcare Financial Services unit acquired by Capital One in August 2015. In May, PDI reported that former GE Capital Healthcare chief credit officer John Crosby, who now holds the same position at Capital One, has been the driving force behind a number of recent hires from the former ranks of GE by the Virginia-based bank.

In a January statement , James Seymour, senior managing director at Capital One Healthcare's real estate financing team and another former GE Capital Healthcare employee, said that demand for medical office buildings and other facilities is moving away from hospital campuses and into local communities. Demand for loans in the space, according to Seymour, is driven by the need to modernise existing facilities and continued consolidation in the provision of post-acute care.

Capital One Healthcare is part of Capital One Commercial Banking and has more than $11 billion in outstanding balances. The unit provides financing for acquisitions, recapitalisations, working capital needs and early-stage commercialisation efforts across 45 healthcare sub-sectors. Including both corporate and real estate financings, the unit closed more than 200 transactions last year.