CM Company News

Financial services group Legal & General has entered the care home sector buying 13 facilities from Prestbury Investments for just over £70m. Currently leased to Methodist Homes (MHA), Legal & General says it has lowered the current rents for 13 of the homes. The leases on these facilities will be subject to annual RPI-linked rent reviews, rather than fixed uplifts, which Legal & General says will create stability and certainty and is preferred by MHA .

Colten Care reported revenues of £40.6m on its estate of 19 care homes for the year ended 28 February 2013. This represents an increase of 10.9% on the previous year’s £36.6m. After a £5m rise in cost of sales and administrative expenses, however, operating profit fell from £6m to £4.8m.

Sovereign Capital has sold domiciliary care provider City & County Healthcare Group in a management buy-out backed by private equity firm Graphite Capital for an undisclosed sum. Earlier press reports had indicated a price tag of around £120m, but that is likely to have been more of a hope than an expectation since it would have taken the asset-light company’s value into 12 times EBITDA territory, based on the £9.9m EBITDA revealed in its annual accounts to March 2013. A possibility of a stock market float had been suggested, but came to nothing.

Somerset Care Group reported a 3.6% increase in turnover from £77.7m to £80.5m for the year ended 31 March 2013. Operating profit stood at £6.3m (2012: £5.4m) and a profit of £5m before tax was made (£4.3m). During the report period, the operator restructured its business into three divisional care boards, which monitor and govern its residential care, community care and support services for people with learning disabilities. Occupancy levels in its care home dropped to 91% due to adult social care budget pressures plus local issues at certain older homes’ the directors said. They continued: The board continues to seek to re-invest sustainably into our care homes, subject to careful review. This supports service offering and employment, and will be further supported following successful re-financing of our lending facilities with Lloyds TSB completed in autumn 2012.’ Construction work started on homes in Cheddar and Somerton, both in Somerset, the latter being funded by a long term rental agreement with the Stepping Stones Group and is due for completion in April 2014. The provider’s community care division now provides around 37,000 hours of care and support per week and the directors said the business had experienced a significant increase in the number of clients funding their own care’.

Broadreach House, the charitable provider of treatment services and support for people suffering from drug and/or alcohol addiction, has reported another fall in income for the year ended 31 May 2013.

Property investor MedicX Fund reported an increased total income to £25.5m (for the year ending 30 September 2013), a considerable jump from the 2012 income of £16.6m which was outlined in restated figures. Following net realised and unrealised investment valuation movements (2013: £404,000 – 2012: £2,400 loss) and expenses of £5,317 (2012: £4,454) MedicX posted profit before tax of £20.6m, more than doubling the £9.8m posted in the previous year.

MITIE’s homecare division continues to perform above the sector average in terms of operating margins, according to its half-yearly results. However, the projected revenues of £93m for the 12 months ended 31 March 2013 following the acquisition of Enara do not look likely to materialise as revenues for the six-month period currently stand at £44.9m.

Property consultant Knight Frank has predicted that care home provider HC-One will be sold by the end of the year, adding further fuel to speculation that a deal is in the offing. In its UK Healthcare Market Review Autumn 2013 (see this issue News), Knight Frank said that the end of 2013 could see the disposal of HC-One and a number of mid-cap corporate operators as the finale of restructuring processes’. Four Seasons Health Care is one company currently being mooted to take on the provider formed two years ago the collapse of Southern Cross (CCMn July 2011). Sector sources told CCMn that it would make a lot of sense for Four Seasons to buy HC-One. It recently refinanced (CCMn May 2012) and HC-One’s portfolio of homes would make a good fit with Four Seasons’ community-focused care division, with a few going into its private-pay arm. It’s an estate that Four Seasons is extremely familiar with and acquiring it would leave Four Seasons in a strong position ahead of a possible sale or flotation next year. According to The Sunday Telegraph, Four Seasons owner Terra Firma has held meetings with the management of and is planning a first-round bid for the business, including landlord NHP, which has been valued in the region of £550m to £600m. Other bidders reportedly included a number of US-based private equity bidders and real estate investment trusts. HC-One is a wholly-owned subsidiary of former Southern Cross landlord NHP and the estate is managed by Court Cavendish. The business was officially launched on 1 November 2011 when around 33% of the former Southern Cross estate was transferred to the company and it entered the sector as the third largest UK provider of long-term care.

Specialist care provider Tracscare could be up for sale in the near future, according to industry speculation.

Following two major acquisitions, Voyage reported revenues of £181.4m for the year ended 31 March 2013, an increase of 27.5% on the previous year’s £142.2m.