nca seminar - 24 may 20166 carmelite street london ec4y 0bs t: +44 (0) 20 7227 0700 f: +44 (0) 20...
TRANSCRIPT
christie.com
NCA Seminar - 24 May 2016
Sector Landscape and Opportunities
Private & Confidential
Presentation by
John Harrison – Director
Max Weidl – Associate Director
Who’s presenting
Max Weidl
Associate Director
Consultancy, London
T +44 (0) 207 227 0706 M +44 (0) 7974 265 261 E [email protected]
John Harrison
Director
Agency & Brokerage, Maidstone
T +44 (0) 1622 656 007 M +44 (0) 7764 241 296 E [email protected]
Specialties:
– Focus on Healthcare
– Strategic Business Reviews
– Commercial Due Diligence
– Feasibility Analysis
– Data Analytics
– Market Research
Specialties:
– With Christie & Co for over 15 years
– Elderly Care Transactions
– Specialist Care Transactions
– Regional Focus on the South East
2
Who are Christie & Co? 80 years of progressive growth and development
Leading valuers, consultants and advisers
Pan-European multi-language team
3,554 care businesses visited in 2015
Care transactional market share of over 50%
Specialists across 7 sectors
Christie & Co today
More than 250 professionals
Launch of the Asia Desk in 2015
80 years of progressive growth and development
Established by three Partners in London’s West End in 1935
First International offices opened in Frankfurt and Paris in 1998
Corporate functions added to areas of expertise
Transfer from the London Stock Exchange in 1988 to the AIM
(Alternative Investment Market) in 2005
Christie & Co Care Advisory Mandates 2015
We inspected on average
68.3 care homes every week
during 2015 - this equates
18% of all registered
provision
Christie & Co routinely sells
more than 50% of all
individually transacted care
homes
(Source: Caring Business)
3
What we do
Agency &
Brokerage
Valuation &
Consultancy
Services
Investment &
Development
– Sales and PR Strategy
– Maximise Pricing
– Marketing of the Asset
– Manage Deliverability
– Control Disposal Process
– RICS Valuations (single assets to the largest portfolios)
– Strategic Reviews/ Options Analysis
– Commercial Due Diligence
– Operational/Performance Benchmarking
– Feasibility Analysis
– Development Appraisals
– Lease Consultancy
– Research Commissions
– Securing Forward Funding and Forward Sales
– PropCo/OpCo/JV Structures
– Lease, Franchise, Management Contracts
– Investment Sales and Acquisition
– Operator Search and Selection
– Site Sales & Acquisitions
Care
Hotels
Pubs
Restaurants
Leisure
Retail
Medical 4
What we are talking about today
5
1. UK Care Market Dynamics
2. Where does the South East fit in?
3. Challenges in the Market
4. Transactional Landscape
5. What Next?
Pages
6-7
8-9
10
11-13
14
Elderly Care Sector – Demographic Drivers Demand is driven by ageing population and growth in diagnosed conditions
1.8%
2.1-2.6%
CAGR
2014-2030
CAGR
2014-2020
Source: Office of National Statistics, Institute of Public Care
Key Gr owt h Dr iver s ( I ndex , 2014=100)
U K Popul;at ion 65+ (000's )
9,6
88
10
,57
2
11
,40
7
11
,61
0
11
,82
6
12
,68
2
14
,01
8
2006 2011 2014 2015 2016 2020 2025
95
100
105
110
115
120
125
130
135
140
2014 2015 2020 2025
Dementia
Stroke
Continence Issues
Mobility
6
Evolution of UK Care Homes 83% of Care Homes developed before 2000 with only 4.5% since 2010
A ge of C ar e H om e St ock - % of C apacit y O pen
Before 1990,
39.93%
1990 - 2000,
42.86%
2000 - 2010,
12.71%
Since 2010
4.50%
Residential Care Capacity UK, 1990-2014
0
100,000
200,000
300,000
400,000
500,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
7
Registrations in the South-East
8 -2,500
-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
2,500
North
East
North
West
Yorkshire
& the
Humber
East
Midlands
West
Midlands
East of
England
London South
East
South
West
Wales Scotland Northern
Ireland
New registrations
Deregistrations
Other Net Changes
Total Change
More registration activity over the past two years than any other region
Changes in care home bed capacities 2013-2015
Today’s Provision & Performance
Beds per 1,000 Elderly En suite % PB% Avg Size
South East
UK
44
42
72%
68%
44%
52%
Occupancy Private resident % AWF EBITDARM per Bed
South East
UK
89%
88%
50%
40%
733
645
7,181
5,928
34
36
Elderly Care Home Provision
Elderly Care Home Performance
High quality provision with good performance driven by private resident share
9
Market Challenges – Christie & Co Research Average staff cost ratio of 61% with agency costs at 7.1% in 2015
*Weighted Average
Source: Christie + Co Survey 2015
Staff Costs / Revenue (%)
Agency Costs / Staff Costs (%)
Source: Christie + Co Survey 2015
50.6 48.951.6
59.3 60.3 61.0
68.7 68.3 69.8
2013 2014 YTD 2015
Min Average* Max
0.7 1.3
3.14.7
6.5 7.1
6.8
9.2 9.5
2013 2014 YTD 2015
Min Average* Max
Average: 1.7 %-ppts
Largest increase: 5.8 %-ppts
Largest improvement: -2.2%-ppts
Average %-change: 51%
Largest increase: 971%
Largest improvement: -26%
New Report
Funding, Staffing & the Bottom Line Impact on Adult Social Care
to be published July 2016
What is the impact of
the NLW?
Where will LA fees be
this year?
How are Specialist Care
operators impacted?
10
Average Price Trends – Christie + Co Price Index 2014 saw a material increase – fuelled by increased liquidity & buyer appetite
Source: Christie & Co Business Outlook 2016
C hristie + C o C are Home Price Inde x - Post M il le nium Pe rformance
-2.6 -2.7
3.2
18.9 16.9
14.517.4
12.2
-16.8
-11.0
0.4
-3.3
-0.7 -1.1
9.8
4.7
-25
-20
-15
-10
-5
0
5
10
15
20
25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
% A
nn
ua
l In
de
x V
ari
ati
on
11
Local Market Dynamics in the South East Dynamic market with significant investor interest and good opportunities
What are investors looking for?
Opportunities to turnaround and add value vs Opportunities with good management run returns
12
Who is buying?
South East based First time
operators with deposits of 40%
attracted by returns available
vs
Existing local operators looking to
build portfolios and achieve
economies of scale
What is available?
Confidential Information Summary:
1. 21 Registration, Managed Home, Kent Coast
£650,000, EBITDA £74K
2. 67 Registration, Managed Home, Kent Coast
£2.25m, EBITDA £354K
www.christie.com for details of 17 homes in Kent
What has been sold? Diversified transaction history with the majority being Going Concerns
13
Bowercroft, Maidstone
£995,000
18 Registration
EBITDA £158K,
sold to a first time operator
Keele House, Ramsgate
£1,100,000
31 Registration
EBITDA £155K,
sold to a first time operator
52%
29%
13%
6%
Going Concers Portfolio Investments
Alternative Use Land Sites
Over the last 3 years, Christie & Co have
transacted 31 Care transactions in Kent
What Next?
christie.com
Contacts
Christie & Co
Whitefriars House
6 Carmelite Street
London EC4Y 0BS
T: +44 (0) 20 7227 0700
F: +44 (0) 20 7227 0701
John Harrison – Director T +44 (0) 1622 656 007
M +44 (0) 7764 241 296
Max Weidl – Associate Director T +44 (0) 207 227 0706
M +44 (0) 7974 265 261