Saturday, March 11, 2006

Southern Cross Completes £1 Billion Sale Leaseback of 294 Nursing Homes - March 10, 2006

Royal Bank of Scotland was today understood to have pulled off the biggest property deal of the year so far, buying more than half the nursing home estate of Southern Cross for an estimated £1 billion.

The deal involves RBS buying 294 of Southern Cross's 573 properties from owners Blackstone, the US private equity group, although Southern Cross will continue to operate the sites under 20-year lease agreements while paying rent.

Southern Cross is the UK's largest provider of residential care homes and runs a number of sites across Scotland, including Bonnington in Edinburgh, Tranent Care Home and Springfield Bank in Bonnyrigg. Southern Cross is expected to float on the London Stock Exchange later in the year with an estimated value of up to £500 million.

Blackstone built the homes portfolio through a number of quickfire deals in recent years. It originally bought Southern Cross for £162m in September 2004 from West private equity before buying Ashbourne Group for £85m from Electra Partners shortly afterwards. Finally, it paid around £560m to buy publicly-listed NHP in November 2004, in a move which made it the UK care homes leader - ahead of Bupa - with more than 28,000 beds across 573 sites.

According to healthcare analysts, buyers have been attracted to the sector because of the increasing old age profile of the UK, the stability of the sector and increased Government spending. Despite Southern Cross being the UK's biggest care home provider, it has only six per cent of the market. Sphere: Related Content

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