Fears for care homes as rescue talks falter

Four Seasons at loggerheads with landlords

CRUNCH talks between care home chain Four Seasons Health Care and its landlords are in danger of falling apart.

Troubled Four Seasons, which is the second-largest care home operator in the UK and looks after 16,000 residents, stopped paying its landlords two weeks ago in order to pull them to the negotiating table.

The business, whose parent companies plunged into administration this year under the weight of a £625m debt pile, is trying to haggle down its rent payments to put it on a more stable footing.

But major landlords, including US hedge funds who own many of Four Seasons’ properties, are refusing to agree any cuts to rent until they have firmer details of the group’s future.

This has put them at loggerheads with Four Seasons and its administrator Alvarez & Marsal, which has not revealed the finer points of the rescue deal designed to save the chain.

Four Seasons announced last week that hedge fund H/2, its major creditor before the administration, would buy all of its freehold homes and a few leasehold properties for £350m.

But the future of approximately 135 of Four Seasons’ 320 homes is in the balance. The company is confident it can agree a solution for the whole group, but landlords complain they have been kept out of the loop.

One said: ‘The frustration that some of us have felt is with the lack of information flow.

‘Landlords have tried to engage and there have been a number of restructurings suggested in the past, but nothing has been agreed. They are coming to us with no clear picture of what Four Seasons is going to look like.’

The landlords are understood to include major funds such as a branch of US hedge fund Davidson Kempner and controversial investment firm Cerberus Capital Management, along with smaller property owners.

Cerberus, led by billionaire Donald Trump ally Stephen Feinberg, has been described by MPs as a ‘hound of hell’ for buying the debts of UK households from banks and driving them towards ruin.

The major landlords are understood to have contingency plans to replace Four Seasons with another operator, if talks fall apart. This should mean minimal disruption for residents. Though the management would change, they would remain in the same home with most of the same staff.

However the future of residents living in care homes owned by smaller landlords, who do not have a contingency plan in place, could be more uncertain.

Four Seasons says current rent levels are unsustainable, and is hoping to reach agreement with landlords over reduced rates.

An independent report found that the majority of Four Seasons’ landlords are charging above market rate for the rent. They have raked in more than £100m over the past two years.

Martin Healy, chairman of Four Seasons, said: ‘Following the exchange of contracts with H/2 Capital, we have put in place a clear pathway to ensure continuity of care across the group and are confident of reaching consensual agreements on our leasehold properties.’

320 Four Seasons care homes £625m Debt pile before administration 185 Homes H/2 Capital Partners has agreed to buy 16,000 Residents £100m Rent paid to landlords over the last two years £350m Price H/2 paid for the 185 homes