Refinance and capital raising on care property

When should you refinance a care or supported living asset?

The first natural refinancing point is practical completion. Development finance is expensive money with a short fuse, so once a scheme completes, a development exit loan repays it and carries the asset through registration and lease-up at a materially lower rate. The second is stabilisation. When a care home's occupancy settles or a supported living lease is signed and bedded in, the asset qualifies for a long-term commercial mortgage at the keenest pricing it will see, and staying on transitional debt beyond that point is simply burning margin.

Beyond those lifecycle moments, the trigger is usually opportunity or pricing. A fixed rate ending, a loan approaching maturity, a lender whose appetite has drifted, or a strong year of trading or a lease indexation the current facility does not reflect are all reasons to test the market. Because the valuation rises with the EBITDARM or the indexed rent, an asset that refinances after a period of growth often finds it can cut the rate and release capital in the same transaction.

How is a care or supported living asset valued for refinancing?

It depends on the asset. A trading care home is valued on its earnings: the valuer builds up from the bed numbers, occupancy, the fee mix between private and local-authority residents and the operating costs to a sustainable EBITDARM, then applies a multiple or capitalisation rate reflecting the quality of the home, the CQC rating and the catchment. Average occupancy ran at 88.7% and the average EBITDARM margin at 30.1% in 2025 on the Knight Frank UK Care Homes Trading Performance Review 2025, and a modern home values at £100,000 to £150,000 per bed on Knight Frank / care market commentary. This is why a home is worth far more once it is well occupied than when it opened.

A supported living property let to a registered provider is valued on its lease: the contracted, index-linked rent capitalised at a yield reflecting the lease length and the covenant, with indicative net yields running around 5 to 6% on Knight Frank UK Living Sectors Yield Guide / market commentary. For the borrower the practical point is that the valuation rewards evidence. Clean management figures and a settled CQC rating push a care home's going-concern value up; a long unexpired lease, robust indexation and a strong provider covenant push a supported living value up. We prepare the figures the way valuers and lenders expect before the application goes in.

How much can you borrow or release?

A term refinance on a stabilised care home is structured as a commercial mortgage at up to around 65 to 70 percent of the going-concern value, and on a leased supported living asset at up to around 70 to 75 percent of the lease-based value, over terms of 5 to 25 years with rates from around 6.5 percent. On a trading home the loan is also tested against the EBITDARM cover; on a leased asset against rent cover. Where the cover is tight that test rather than the loan to value sets the ceiling, and we model both before recommending a structure.

Equity release works inside the same limits. If a care home now valued at 6 million pounds on its going-concern basis carries 3 million pounds of debt, a refinance at 65 percent supports a loan of around 3.9 million pounds, releasing roughly 900,000 pounds before costs. For operators that released cash is the deposit and equity for the next home, which is how single-asset owners become portfolio owners. A development exit on a newly completed scheme sits lower, sized against the early trading or the freshly signed lease, with the full release coming at stabilisation.

What does a lender want to see from the borrower?

For a trading care home the pack does the heavy lifting: two to three years of accounts where they exist, monthly management figures showing the occupancy build, the fee mix between private and local-authority residents, staffing and agency costs, and the CQC rating and inspection history. For a younger home the occupancy trajectory against the original appraisal matters most, because it shows whether the home is on the path the valuation assumes. For a leased supported living asset the lender wants the lease, the indexation record and the registered provider's accounts and regulatory standing.

Alongside the numbers, the lender assesses the operation: the management's experience, the registration's continuity, and for supported living the headlease versus underlying-provider structure where one exists. A well-run home or a clean long lease is a straightforward case to place. We also present the borrower properly, covering the ownership structure, wider assets and the plan for any released capital, because a lender backing your next move wants to understand it.

How does the process run from application to drawdown?

A typical refinance runs in four stages. First we review the current debt, the trading figures or the lease, and your objective, then test the market and bring back indicative terms from the lenders whose appetite fits. Second, you choose a route and the lender issues a decision in principle, followed by a formal application with the trading or lease pack. Third, the lender instructs a valuation, on a going-concern basis for a trading home or a lease basis for a leased asset, and runs its credit process. Fourth, the legal work completes, the new facility repays the old one and any released funds are drawn.

End to end, a clean case commonly takes around 8 to 12 weeks, with the valuation usually the longest single step. Starting early is the cheapest decision in the whole process: leaving a refinance until the existing facility is about to mature surrenders your negotiating position and can force a stopgap. We start conversations around six months ahead of any maturity so terms are agreed with time in hand.