Market Round-Up - Property forecast

Reportable deal completions in May 2017

Increase in deals compared with May 2016 (and also on the previous month).

 Market whispers: The North East and Midlands are expected to become a hotbed of activity this summer, with as-yet unreported sales in the pipeline. Overseas, France, Germany and the Nordic countries have all been hotspots for group sales over the past 12 months, a trend which looks set to continue.

 Theme of the month: The general election run-up has not appeared to slow the appetite of acquisitions in the sector this month, but following the result, will a potential change of government see deals slow down in the second half of 2017?

Busiest regions for sales and purchases: Yorkshire, Gateshead, Devon.

Deal of the month: Childbase Partnership handing over ownership of its 41-strong nursery group to employees following a vote to move from individual share ownership to a long-term trust.

MARK’S MARKET MAGIC

All providers: Most nursery businesses have entered into commercial contracts. These are usually related to waste, cleaning services, broadband and telephone hire. Yet many are not aware of the terms and conditions these contracts contain. Be aware that many contracts include a minimum period, within which you are penalised if you try to cancel.

For items such as water coolers, if you cancel within the period it is usually a condition of the agreement that you return any hired goods but still have to pay the rent until the end of the minimum period.

Source: Data derived from Experian Corpfin reportable transactions in the children’s daycare sector for May 2016 to May 2017; holds detailed information on deals over £500,000 (or the currency equivalent). Created using information from sources including direct reporting and the press.

INVESTOR PROFILE

Childbase’s 1,600 employees have made the company the tenth-largest employee-owned company in the UK in a deal announced last month. Staff voted to move from individual share ownership to placing shares in a long-term trust.

External investors – mainly friends and former work colleagues – funded the company’s early expansion from its launch in 1989. Employees were able to buy shares through a company scheme which offered ‘buy one, get two free’ incentives. Investors could only sell shares back to the Employee Benefit Trust, which sold the shares back to employees.

Now the new trust board – which has independent and employee-elected directors from the company’s 42-member Partnership Council – holds all shares. No matter how many shares employees used to own, or their position in the company, equal dividend payments will be paid to all qualifying staff (employees serving a probationary period don’t qualify).