Care home expansion

Sep 19 2007 by Iain Laing, The Journal

THE country’s biggest care home operator has continued its rapid expansion by adding almost 2,100 beds to its portfolio.

Darlington-based Southern Cross Healthcare Group has entered an agreement with Bondcare Group for the management of 39 care homes for the elderly containing 1,990 beds.

It has also bought a care home in Harrogate, Yorkshire, with 106 beds, bringing the number of beds operated by the company up to 36,186 in 710 homes.

The news follows the firm’s announcement last month that it had completed the option to buy five care homes in Scotland.

Last week the company also announced the opening of 70 new beds in Dundee from its development pipeline.

The company, which has a market capital of around £1bn, said it expects to add 2,600 beds to its portfolio within the next 12 months.

Southern Cross chief executive Philip Scott said: “The past 12 months have seen the company complete numerous acquisitions, affirming our strategy to lead the consolidation of the UK elderly care home market.

“Today’s announcement adds over 6% to bed capacity and demonstrates the flexibility in our acquisition model through direct tenancy arrangements. Bondcare’s 39 care homes are a high quality addition to our portfolio in both North-East and South-East England.”

Last Wednesday Southern Cross announced plans to raise £23.8m by selling its freehold interest in seven care homes. The move will allow the company to raise the original sum it paid to develop and acquire the seven homes.

The care home industry in the UK is believed by some analysts to be worth £12bn with around 450,000 beds. Southern Cross enjoys an 8% share of the market.

Since floating in July 2006 the County Durham company has adopted an aggressive expansion plan.

In June the company snapped up 845 beds from Northampton-based Avery healthcare for £96.5m.

Two months later the firm completed a £30m deal with Gateshead-based rival Executive Care Group to buy nine homes across the North of England.

The business has prospered in recent years as an ageing population has meant demand for care home beds in Britain is now growing at the rate of 14,000 beds every year.