Southern Cross Home group's bid to be debt-free

Apr 22 2010 by Karen Dent, The Journal

CARE home group Southern Cross has sold the freehold on a further two properties for £14m as it bids to become debt-free by the end of the year.

The Darlington-based group, which runs about 700 homes and is Britain’s biggest operator in the sector, sold the freeholds on the Orchid View home in Copthorne, West Sussex, to Citrus Copthorne Real Estate, and Kingsfield in Faversham, Kent, to Citrus Faversham Real Estate.

It will rent back the properties, paying £1.12m for the first year, and run them on a long-term lease.

The company said: “The proceeds will be used to repay £6.2m of drawings outstanding on the group’s development facility and the balance will reduce the group’s term loan to £15.7m.”

Southern Cross had 20 freehold properties with a book value of £46.5m at the end of its last financial year on September 30, 2009, and has sold seven of them.

Chris Glasper, a director of equity research at Brewin Dolphin in Newcastle, said: “This is part of a planned and expected programme. It’s part of an ongoing plan to sell their freehold assets. It is looking to be debt free by the end of this year.

“Historically [the debt] has been quite high. But there has been a reduction of the last two years by selling their freehold assets.”

Police are investigating the death of a resident and reviewing 15 others at the group’s St Michael’s View care home in South Shields.