Historic occupancy, number of self-funding clients, marketing strategy and CQC rating will all affect your care home’s value in the post-COVID environment, said John Harris, director of business sales agent Christie & Co in a recent webinar.
Organised by law firm Bishop Fleming, the webinar examined the impact of COVID-19 on care home sales and transactional outlook in the South/South East.
Further information on buying & selling care homes, as well as marketing can also be found in our latest issue.
In his webinar presentation Harris reassured operators that business valuations could take a holistic view of the care home business, looking at a wide range of factors to assess a fair maintainable trade value and based on predicted time to trading performance recovery. He said that business valuations would assume that interruptions to trade due to COVID-19 are temporary, although recovery in self-funding occupancy will be crucial to the valuations received.
Charles Phillips, director, Southern region, said that Christie & Co was currently seeing pent-up demand from investors and operators for care homes of all size and categories. Closed homes are also seeing demand from supported living space operators, residential developers and specialist care providers, particularly if in the M25. He said: “Our issue is getting stock on the market.”
However, with a large number of businesses in financial distress, he warned that disposal programmes could see a larger number of properties coming onto the market later in the year. Citing Christie’s forthcoming sale of 52 HC One homes, he said: “There are good opportunities for local operators to grow their portfolios.” Homes with larger, single occupancy rooms, with en-suite facilities were particularly desirable, he noted.
The webinar also looked at changes in the financial and legal environments for care home sales post COVID.
Charles Davey, Bishop Fleming corporate finance partner, said sellers should expect increased scrutiny of their business plan, including current debts. However, purchasers were reassured that health and care remains popular among lenders, particularly, private equity or real estate investment trust (REIT) financiers. In terms of sales due diligence, Hazel Philips, Royds Withy King head of social care added that there is increased use of warranties/indemnities for COVID-related initiatives, eg, COVID job retention scheme and infection control funding. However, resolution of the Mencap sleep in-case has reassured purchasers