The Christie and Co annual report into the state of the market for care homes reveals some interesting aspects, suggesting that the overall level of activity in the buying and selling of care homes and the care home market was higher in 2017 than at any time since the recession started in 2008.
One interesting development has been that there has been a trend towards separating the property-owning companies, who see homes as a good investment, and the operating companies who actually run and provide the services. Much of the new development in the market has been driven by the Private Pay market rather than being solely reliant on public care fees. The focus has moved to high-quality purpose-built stock, which is future-proofed by the prospect of secure long-term income as investors seek to improve the value of their estate. Independent investors took advantage of low-interest rates, leading to a high level of activity to expand and improve estates.
On the downside, the market continued to see numbers of care homes in financial difficulty, and this looks set to be a continuing issue. As could be predicted this is often where there is an over-reliance on income from local councils, and where the combination of the demands of ageing stock with ever greater statutory requirements puts increasing pressure on margins.
How we can help
Albert Goodman is pleased to develop strong relationships with clients to find ways forward. We advise on the full range of requirements from valuations to due diligence for new opportunities, to facing with realism the financial challenges and the possible need to sell. We usually advise a 3 to 5 year timeline for succession planning.