Public Services Properties Share Discussion Threads

[scburbs] 14/7/2011 11:00

The public sector care home closures should also be supporting utilisation stabilisation/improvement (utilisation is as, if not more, critical to profitability as price). The Sheffield closure is interesting is quoting the cost in the private sector as being half the cost of the public sector maintaining the homes. This supports what should become a growing trend of public sector care homes closing (or being sold) and switching provision to the private sector.

"There's to be a major shake-up in Adult Social Care Services which looks likely to include the closure of at least six care homes and three day centres in Leeds.

Leeds City Council have spent the last 5 months looking at ways to cut costs including carrying out a review of its 19 care homes."



"ANGRY protesters launched a last-ditch demonstration against proposals to close eight care homes yesterday – before councillors voted unanimously in favour of the plans.

About 25 members of the public sector trade union Unison gathered outside Lincolnshire County Council's headquarters in Newland, Lincoln, at 9.30am.

...

Under the plans agreed yesterday, five care homes will close in September. And the final three will close after March 31 next year after suitable private alternatives are found.""



"Woodland View and Birch Avenue care homes in Sheffield provide care to some of the city's most vulnerable people with dementia, many of whom have chronic symptoms.

Yet the two services, which between them care for 100 residents with complex needs, face closure if Sheffield primary care trust (PCT) rubber-stamps plans to axe £2.8m of funding for the homes on the grounds that the services offer "poor value for money".

...

In January, the PCT announced its intention to withdraw the top-up funding, arguing that the residents at Woodland View and Birch Avenue could be treated for half the cost at "other care homes" in Sheffield, the majority of which are run by private providers."

[scburbs] 13/7/2011 10:29

The likely closure of certain SC homes should take supply out of the market. Also new placements are less likely to go to any SC homes where their future has not been secured.

This should provide a utilisation boost to other providers.

[envirovision] 12/7/2011 23:33

One would have thought the then government would have wanted to work with SC to ensure a viable private/public care system when SC was setting up its business plan, particularly after the financial troubles of Tamaris PLC in 1998 (leading to its bankruptcy in 2000) which is an identical failure to SC today but not quite of the same magnitude.

Instead, 11 years later the exact same thing is happening all over again but on a far larger scale.

SC started the sale/lease business plan back in 1999 some 2 years after labour took power, what a total and utter waste of more than a decade to resolve these issues in the context of one of the greatest fiscal expansions the world has seen during the last 100 years. I often wonder how politicians particularly those who served during the last decade sleep at night, can you imagine ?

[holts] 12/7/2011 19:43

sc management were convinced by some bean counters that the 'efficient' thing to do was to sell and lease back , and then they were mugged , sweat your assets by all means but hang on to them .

[goliard] 12/7/2011 17:20

If they have the cash then they may well do. The SCHE landlords should be easy to talk to at the moment.

If PSPI want to calm the market they need to spend some time explaining their lease structures clearly so that they are not tarred with the SCHE brush. I guess the worry is that there might be lease issues here too, but I will leave that for others to work out.

[davidosh] 12/7/2011 17:04

goliard....Indeed. It would be interesting to know the difference in lease costs per bed for a SCHE home and a ECR home (with PSPI as landlord) within very close proximity ie. same town just to see how SCHE management shafted themselves !

I wonder if PSPI will get a chance to pick up any cheap assets here.

[goliard] 12/7/2011 16:47

They only have ludicrous rent reviews if they agree to sign ludicrous leases in the first place. There is only one place to put any blame for the SCHE debacle (or indeed any other with these so called ludicrous leases) and that is with the management who put the sale and leaseback strategy in place and signed the leases in the first place. They knew exactly what they were doing. This sort of nonsense only happens when you have an Opco / Propco split or sale and leaseback strategy and again, that is the fault of the management and NOT the landlords.

[holts] 12/7/2011 10:47

Care homes can not stand these type of ludicrous rent reviews , when maybe three quarters of their income goes on wages , another always upward spiral, along with regukatory this that and the other , there is no scope for conglomerate type operators to make money as they can not be nimble enough.

[kimboy2] 11/7/2011 14:43

I didn't get the impression that the landlord's were forced to take on the running, if indeed that is what they have done.

It seems they felt they could do better elsewhere.

[envirovision] 11/7/2011 14:38

Selling pressure again at PSPI after the confirmed failure of Southern Cross today. Interesting that no one bothered to step up to the plate to take on the running of any of these homes. In every case landlords are being forced to become owner / managers.

[ptolemy] 04/7/2011 11:06

USI is quoted and so there's some readily available info. Their address is one of the most prestigious in Zurich. Last year, or perhaps the year before (memory fails me) they broke the covenant on some other (non-PSPI) properties, but rectified the situation pretty quickly with a cash payment.

[kimboy2] 04/7/2011 09:46

This is Elliot I believe;





They seem reasonably smart;




There was quite an interesting RNS last year regarding Elliot's holding;



It sounded as if the board felt threatened by Elliot's large shareholding. It would be interesting to know what the 'relationship agreement' was. They already hold a co-investment agreement specified in the admission document page 132.

I suspect that Elliot just view PSPI as an investment that yields a good return that they can go to sleep on without any particular worries.


It would be interesting to get any information on Esquire and who owns that, and of course a look at their balance sheet. I notice that PSPI did give them a mezzanine loan for the purchase of properties prior to admission, which was subsequently repaid.

It may be that Elliot has a holding in Esquire.

[davidosh] 04/7/2011 09:03

Thanks Scburbs....I noticed that Elliot also had an interest in some of the German care homes that PSPI picked up so they must have varied and wide reaching investments. I may try to speak to them as it could be quite interesting.

The important thing that comes with large holders with deep pockets is that any further funding and bank renegotiations should not be a problem as they would support any equity raising as they did last time.

[scburbs] 04/7/2011 08:51

Davidosh,

Elliot have been fairly high profile recently with the National Express battle. They have around 17.5% of National Express and were pushing for 3 new Directors, of which they seem to have got one. For an activist investor they have been fairly supportive at PSPI (they were the main buyer in the placing/open offer and acted as underwriter), perhaps the 10% yield is placating them!

"The Board of National Express Group is pleased to announce that, following discussions, Elliott Advisors (UK) Ltd, its largest shareholder, has withdrawn its three resolutions from today's Annual General Meeting and has committed to support the Board and management on all other motions.

The Board and Elliott have also reached agreement that, subject to certain conditions, Elliott will not, inter alia, call a general meeting or seek to agitate against the company, its Board or management publicly until after the Company's 2012 AGM at the earliest.

As highlighted in the Group's IMS on May 5th 2011, the process to bring additional non-executive expertise onto the Board is progressing well. The Board has decided to seek to appoint three new independent non-executive directors, with at least one new director having experience in the North American market and one in the Continental European market.

As previously announced, the Board included all three candidates proposed by Elliott in its review. Of these, one candidate, Chris Muntwyler, was shortlisted and has now been offered a role as an independent non-executive director, with effect from 11th May 2011."

[davidosh] 04/7/2011 08:45

Does anyone know much about the three main shareholders here as they have about 65% between them ?

[ptolemy] 04/7/2011 08:20

IFD doesn't need one client, it has a management that has demonstrated several times they can reek havoc on the share price.

[simon gordon] 01/7/2011 18:02

Ptolemy,

IFD looks a safer "junk yield" property play. It has diversified assets and no one client can destroy the share price. One major client for your cashflow is a very dangerous game.

[woodcot] 01/7/2011 16:32

Over the last few days I've bought a few shares in the company. I believe the share price has only been caught up in bad sentiment regarding Southern Cross.

If that is the case I'm looking at a good dividend and some growth in the SP, risk versus rewards I believe is in the investors favour at this level and don't think it will be long to find out.

[kenny] 01/7/2011 15:41

So we have to await the acutal results to 30.06.11 - as I may have stated before(!) - words are fine but you cannot argue with cash in the bank, or lack of it, and a rise in trade creditors.

[joe say] 01/7/2011 14:49

that's my take as well envirovision (ie update soon - in line), especially given the sentence

PSPI continues to execute on its business plan and remains confident that it has a leading operator as the tenant of its UK portfolio, with which it has a 10 year track record.

[envirovision] 01/7/2011 13:44

Last years trading update was end August.

joe say, my read across from your reply: "The Company is likely to issue a trading statement over the coming weeks as it is approaching the end of the half year which we expect to reflect the above"

In other words the expected trading statement is expected to be in line, i.e. no new news (good/or bad).

Which under the circumstances is good news clearly, if you follow me.

[wjccghcc] 01/7/2011 09:01

I hope they outline a strategy for the refinancing in the trading statement. That would solve most of the issues.

[goliard] 01/7/2011 08:35

Same as before and no promise to deal with the issues raised here. Poor.

[joe say] 30/6/2011 18:13

Here is the verbatim response to my query (ies)

There has been considerable negative publicity in the press surrounding Southern Cross, the largest operator in the UK care home sector and well as the provision for social care in general. We believe that this has had a knock on effect on the PSPI share price.


PSPI quoted European Care, its sole UK tenant, in the last Annual Report trying to highlight a number of key strengths which would differentiate EC from several of its peer group. PSPI continues to execute on its business plan and remains confident that it has a leading operator as the tenant of its UK portfolio, with which it has a 10 year track record.


The share price is of concern to the Company and the issue has been discussed by the Board and its advisers; however, absent repeating the comments made earlier this year, it is felt that there is little that the Company can add at this time. The Company is likely to issue a trading statement over the coming weeks as it is approaching the end of the half year which we expect to reflect the above.

[envirovision] 30/6/2011 17:56

Hosede if your comfortable with the risk then its most probably a fairly safe buy in my books.