Specialist business property advisor Christie & Co has said 2019 was an outstanding year for the care sector.
In its Business Outlook 2020 report, Christie & Co reported its team accounted for 66% of all individually transacted care home deals.
Richard Lunn, Managing Director – Care at Christie & Co, (pictured) said: “Whilst the sector still has operational pressures in terms of local authority fee rates and nurse recruitment, overall sentiment from a transactional perspective is very positive as evidenced by the strong level of interest we received from buyers across a wide range of care assets in 2019.”
The business property advisor said the going concern transactional market had remained active, with excellent volume and a wide range of stock.
Christie & Co saw an increase in both larger and smaller care home interest fuelled by strong buyer demand, particularly from entrepreneurial regional operators.
Care homes of 50-70 beds saw the greatest rise in transactional activity (50%) followed by 30-50 beds (35.1%), then less than 30 beds (17.6%) and more than 70 beds (17.6%).
Christie & Co facilitated the sale of 3,018 beds with a number of related investment deals involving forward funds with a range of operator covenants, with a gross development value of £300m.
Investment activity in the secondary market was also steady with funds such as Impact REIT announcing a number of deals involving regional operators.
The business property advisor reported an “ever increasing” number of institutional investors and specialist funds attracted by the need-driven fundamentals of the sector, combined with challenges in the more traditional parts of the property market such as high street retail.
Average prices rose by a healthy 5.5% in the year, compared with 6.1% and 3.1%, in 2017 and 2018, respectively.
Looking ahead, Christie & Co said more M&A portfolio activity was likely once uncertainty associated with Brexit was resolved, with new build development and investment activity expected to remain very active.
The business property advisor predicted a portfolio transaction involving the sale of an operating company in 2020.
Michael Hodges, Managing Director – Care Consultancy at Christie & Co, said: “Moving into 2020 and with a majority government now in place, we anticipate a notable increase in major portfolio M&A and re-finance activity during the year ahead. Initial signs are already very positive, so we expect a busy year from both a transactional and advisory perspective.”
