Our recent deals in the care sector
As we recently had our year end, we thought it would be a good opportunity to reflect on some of the deals in the care sector that we have been involved in over the last 12 months or so.
Following on from a hugely successful 2016/17 where we dealt with acquisitions of over £28,000,000 and refinancing in excess of £100,000,000, we have continued to see buoyancy in the care sector which has seen us advise on acquisitions of £32,000,000 culminating in an acquisition of a group of 13 elderly care homes for £21,000,000 in March.
The deals we have been involved in have been throughout the UK and of varying sizes from single specialist homes to larger groups.
There is no sign that the sector is set to slow down going forward with several acquisitions and disposals in the pipeline which are set to complete over the next few months.
We continue to see new investors in the sector attracted by high levels of returns which is reflected by the higher multiples in the sector of between 7 and 8 times EBITDA from the deals we have been involved in.
As expected, we see a large number of transactions in the South East where private fees for residents can be maximised but it is also pleasing to see plenty of activity in the other regions.
In particular, the East Midlands is proving popular for investors as care homes in this region are experiencing profit margins similar to those achieved in the South East as a result of much cheaper land costs which are compensating for the lower fees being charged.
New builds in the sector are also becoming increasingly popular as there appears to be a clear link between the date a care home opens and its profitability. However, operators are realising that they don’t have to buy a new home, they can buy an older property and refurbish up to current standards which can lead to better profitability in the long run. This also has the advantage for investors of acquiring EBITDA without the lead time of developing the home.