Funding a Healthcare Investment with NHS and Pharmacy Income

The Property and Income Structure

The health centre generated strong, diversified income:

• The pharmacy lease had over 10 years remaining, with scope to re-gear and uplift rent to market level.
• The GP tenants held long leases underpinned by NHS Premises Cost Directions.
• An additional NHS Trust lease was due to be signed before completion, strengthening covenant quality.

Collectively, the property offered full occupancy and NHS-backed rental income, but because it would be acquired in a new SPV, most lenders initially treated it as an investment property, not an operational healthcare asset.

The Challenges

This deal was not straightforward.

• The new SPV ownership meant traditional healthcare lenders viewed it as non-owner-occupied, limiting leverage.
• Commercial investment lenders undervalued the NHS lease strength, pricing it closer to retail or office space.
• The borrower wanted to combine the best rate and highest possible LTV, ideally up to 75%.
• The structure required multiple leases to be re-geared and a new NHS lease to be executed prior to completion.

Many lenders would either decline or price heavily due to these technicalities. Our role was to frame the transaction so that credit teams saw it as a healthcare asset with investment-grade income.

Our Approach

We positioned the deal as a hybrid healthcare investment, demonstrating that default risk aligned with healthcare lending, not commercial property. We supported the case with:

• Group accounts showing strong profitability and covenant strength.
• Draft lease agreements and re-gear terms evidencing long-term NHS tenancy stability.
• An income schedule and sensitivity analysis to illustrate resilience even under reduced occupancy assumptions.

We introduced three lender routes in parallel:

1. Bank healthcare teams for low-rate term debt (Barclays, Handelsbanken, HSBC).
2. Challenger banks such as Shawbrook and Redwood to explore higher-LTV options.
3. Private institutions interested in medical investment yields.

In addition, we coordinated referrals to sector specialists:

• A planning consultant to advise on future expansion potential.
• A specialist healthcare solicitor to manage the NHS lease documentation.
• An accountant experienced in SPV and group structuring for tax efficiency.

This combination gave the client a fully coordinated funding and advisory package — not just a loan.

The Result

The final structure delivered a 70% LTV term loan at a sub-6% fixed rate, secured over a 20-year amortising term. The lender accepted the re-geared leases as quasi-owner-occupier exposure, reducing margin and removing the investment premium. The client acquired full control of the medical centre within 10 weeks and secured long-term rental income supported by NHS covenants.

Why Rangewell

Rangewell’s healthcare and property teams specialise in complex cross-sector transactions that sit between owner-occupier and investment lending. We understand how to:

• Reframe hybrid structures so lenders recognise the true covenant quality.
• Introduce specialist professionals - planners, solicitors, accountants - to remove execution risk.
• Negotiate competitive pricing even when the structure doesn’t fit neatly into a lender’s product box.

For clients, this means not just finance arranged, but a deal that delivers both leverage and longevity.

FAQs

Can a pharmacy group buy the health centre where it trades?
Yes. Many GP partnerships and NHS landlords are selling freeholds to focus on operations. Pharmacies and healthcare operators can purchase the building through an SPV, provided the leases are clearly documented and the lending structure supports long-term repayment.

What lenders fund NHS-backed property purchases?
Mainstream banks such as Barclays, HSBC, and Handelsbanken remain active, but challenger lenders like Shawbrook and Redwood will often go higher on LTV. The best route depends on whether the property is owner-occupied or purely investment.

How high can the LTV go for healthcare investments?
With solid NHS or pharmacy covenants, 70–75% is realistic. Where leases are re-geared or parent guarantees are added, certain lenders may stretch to 80%.

Is planning advice relevant to healthcare property purchases?
Yes. Many medical centres have surplus land or scope for expansion. Early planning input can increase valuation and improve refinance options.

Why use a specialist broker instead of going direct to the bank?
Because mixed-use healthcare investments rarely fit a single credit model. A specialist broker understands how to position the risk profile, assemble the right documents, and bring in supporting professionals to satisfy credit teams and valuers.