Care updates from Business Outlook 2020

2019 has been an outstanding year in terms of brokerage and advisory activity with our teams selling 66% of all the individually transacted care homes in the market. (Source: Caring Times).

MAJOR PORTFOLIO & INVESTMENT DEALS

In the investment market appetite remained very strong in 2019 with high quality single or small groups of assets let to leading covenants, resulting in prime yields compressing to record low levels.
 
This reflects demand from an ever increasing number of institutional investors and specialist funds, attracted by the need driven fundamentals of the sector, coupled with challenges in more traditional parts of the property industry such as high street retail.
 
We have been at the forefront of the development market, facilitating the sale of 3,018 beds with a number of related investment deals involving forward funds with a range of operator covenants.
 
Several of these transactions have created new yield benchmarks for strong regional and SPV type covenants. Investment activity in the secondary market has also been steady with funds like Impact REIT announcing a number of deals involving regional operators.

TRANSACTIONAL MARKET

The going concern transactional market has remained active with excellent volume in the market and a wide range of stock. The strength of our team is its ability to transact individual care home deals delivering greater value for our clients.
 
In 2019, we saw an increase in interest across both larger and smaller care homes, fuelled by strong buyer demand, particularly from entrepreneurial regional operators.

CLOSED / VACANT POSSESSION TRANSACTIONS

During 2019, we sold a number of care homes on a closed/ vacant possession basis. In nearly all cases, the closed assets which we brought to market attracted a good level of interest from a wide range of buyers including entrepreneurs, developers and other parties looking to acquire assets for
alternative uses. The latter typically included specialist care, childcare or supported living in addition to re-development or non care related uses. 

CARE MARKET PREDICTIONS

• More portfolio M&A activity is likely once uncertainty associated with Brexit is resolved
• New build development and investment activity will remain very active
• A portfolio transaction involving a sale of an OpCo is likely to occur

Richard Lunn Managing Director - Care T: +44 7768 646 989 E: richard.lunn@christie.com

CASE STUDIES 

• BIRCHLANDS NURSING HOME

In June 2019, we sold Birchlands Nursing Home in York to Impact Healthcare REIT plc. The large, purpose-built home with extensive facilities and 51 bedrooms will be added to their existing portfolio of 82 care homes.

• ABBEY HOUSE

Acting on behalf of the Milestones Trust in Bristol, we sold Abbey House in Swindon to the Care Concern Group. Milestones Trust commissioned the development of Abbey House which opened for trading in 2016. The care home provides 73 single bedrooms in a three storey, purpose-built property.

• DIGNUS GROUP LIMITED

We completed the sale of the elderly care division of the Dignus Group Limited, which owned
and operated a group of four established care homes across the West Midlands. The buyers, RD Capital Partners, are a growing investment company in the healthcare industry.