As consolidation reshapes the care sector, TCHE spoke to Monica Macheng about what changing ownership models mean for operators, investors, residents and the future of care.
Monica Macheng: From the deal table I see three drivers. Sellers: founders reaching retirement with no successor, and a compliance load that has outgrown a one or two-home business. Buyers: long-term capital, led by US REITs buying with equity at prices that leveraged UK bidders cannot match. Property: a large part of the stock is ageing and bringing it up to modern and energy standards needs capital that small operators cannot raise alone.
MM: Appetite is high, but supply is tight, and I would separate volume from speed. The recent £1.1bn CareTrust and LNT deal shows US capital has not been put off by the Competiton and Markets Authority (CMA) Welltower investigation outcome (which led to the US REIT having to sell and change operator on some homes it had acquired due to local competition concerns). Deals are taking longer to complete because there are more consents to line up. The Welltower decision will slow the largest transactions further, because buyers will now want competition analysis done before exchange, not after completion.
MM: A great deal, and they are often the trigger for the first call to a lawyer. Employer national insurance at 15 per cent from a £5,000 threshold, a National Living Wage of £12.71, local authority fee uplifts of only 4.3 per cent to 5.1 per cent, the end of new overseas recruitment for care workers and the coming 'fair pay agreement' all weigh on owners who rely on local authority fees. Many are choosing to sell while the business is still performing.
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