Crunch time in care homes rents battle

Four Seasons in bid to stave off administration

EMBATTLED care homes operator Four Seasons will hold crunch talks with landlords this week aimed at getting them to accept the rent cuts it needs.

Sources fear that if the landlords do not agree to the cuts, then the companies that operate Four Seasons’ 320 care and nursing homes could end up in administration. It has approximately 16,000 residents and employs 22,000 people.

Last week the healthcare group stopped paying rent in order to try to force its landlords to lower its rental bill, after being advised by a third-party valuer that it was paying above market rates.

It has paid its landlords, which include Davidson Kempner Capital Management and Aedifica, £100 million in rent over the past two years.

A source close to the company said that landlords had known for two years that Four Seasons had wanted to lower its rent bill. He also claimed that the landlords have not yet suffered losses, unlike its former owners and creditors. However landlords say that they have been eager to sit down with the company and discuss ways to get it back on an even keel since late 2017, when private equity group Terra Firma lost control of it in late 2017 after struggling to meet its debt repayments.

They were also keen to stress that if the worst does happen to Four Seasons, alternative care providers will be on standby and that the care of residents will not miss a beat as the transition will be “seamless”.

A spokesman for Four Seasons said that payments to suppliers and employees will continue as normal and that its residents would see no disruption in their care. He added: “Continuity of care has been and remains our priority throughout this process. The decision to withdraw rent payments is part of the lease negotiations which we announced recently.

“We are actively engaging with landlords and we are confident that we will reach an agreement that will put the group into a more sustainable financial position for the long term. In turn, this will deliver a more sustainable return for landlords.”

Four Seasons’ parent companies were put into administration in April and advisers from Alvarez & Marsal were brought in to sell the business, which is struggling under its £700 million plus debt mountain.a&m hopes to conclude a sale of the business before the end of the year.

Former pensions minister Ros Altmann said that to prevent more care homes groups from falling into trouble like Four Seasons, operators should be forced to prove they have adequate finances, before they can take on residents.