GMB Southern Cross Demo
Wednesday 18
th August 2010
GMB DEMONSTRATE
TODAY AT HARRODS OVER QATARI INVESTMENT AUTHORITY OVERCHARGING
RENTS ON FREEHOLDS OF SOUTHERN CROSS
CAREHOMES
This overcharging on freehold rents is
a right royal Qatari rip- off of
Britain's elderly and Qataris have a
legal, moral and ethical responsibility to help the care home
residents says GMB
GMB, the union for staff at Southern Cross
care homes for the elderly, today staged a demonstration outside
Harrods in protest at the overcharging of rents on the freeholds of
properties acquired by the Qatari Investment Authority (QIA)
in 2006 and used as care homes by Southern Cross. In May the
Qatari Investment Authority acquired Harrods, the up market
department store in Knightsbridge in London
The demonstration took place outside
Harrods in Knightsbridge,
London. Photos available courtesy
GMB from Andrew Wiard07973 219201
or Andrew@reportphotos.com
On the demonstration, with banners and
placards, were GMB members and family members of residents in the
care homes. Slogans on the demo wer “stop the
right royal Qatari rip- off of
Britain's elderly” and
“QIA need to renegotiate the leases to leave money for the
care home residents”.
GMB estimate that rents for the 744 Southern
Cross care homes are £100m higher than they should be. QIA acquired
the freehold in up to half of the homes in 2006 and are still the
legal owner of them. See Notes to Editors on a financial history of
Southern Cross and QIA links.
In January 2010 GMB wrote to councilors on a
number of councils to bring to their attention GMB’s concern about
high rents charged by the owners of buildings, including QIA.
used as Southern Cross Care Homes and the lack of transparency
regarding who owns the care homes and the financial returns to the
ultimate owners of the properties.
There are 744 Southern Cross Care Homes in the
UK with a total of 38,124 care beds for the elderly (September
2009).The published accounts for that period showed that in
2009,Southern Cross paid £239.1m in rent to the owners of the
properties. GMB research indicates that up to half of the
properties were acquired by a company called NHP, of
which the ultimate parent company is Delta Commercial Property.
This is a company owned by the Qatari Investment Authority and is
registered in the Isle of Man. The financial returns for this
company are consolidated within Libra No.2 Ltd, a company
incorporated and registered in the Cayman Islands.
Southern Cross rents paid to the homes
acquired by QIA in 2009 equated to £6,348 per bed. This was a
4.9% increase on the 2008 figure when the rent was £6,050 per bed.
This in turn was a 3.1% increase on the 2007 figure when the rent
per bed was £5,866. This in turn was a 7.9% increase on the 2006
figure when the rent per bed was £5,435. Thus in the past 3 years
rents have gone up by 16.8% at a time when property values were
falling.
GMB have told the councilors that use Southern
Cross to care for their clients, paid for with public money, that
if the beds were used for different purposes the market clearing
rents paid to the landlords would at least £100m less. If the
accommodation was used for students, for example, GMB conclude that
the total amount the landlords would receive is £121.8m.If the
space were made available for private residential use, GMB consider
that this would give rise to £139.5m in annual rental income.
Paul Kenny GMB General Secretary said
“This overcharging on freehold rents, built in to the
original deal by private equity in 2006, has been a right
royal Qatari rip- off of
Britain's elderly. The Qataris have a
legal, moral and ethical responsibility to help the care home
residents caught up in a property gamble that has gone
wrong.
The
QIA gambled huge sums of money in the property market with the
lives and welfare of tens of thousands of vunerable
UKpensioners who are in care- many of them
fought in the war for their country. These pensioners are just
pawns for QIA in the high world of finance and the offshore tax
havens.
GMB are seeking a meeting with the QIA
for them to explain to us who actually controls the pensioners beds
that QIA still legally own and where the sky high rents still being
paid are going.
We know that QIA packaged the loans it
raised after it acquired the homes and them arranged into a vehicle
called Titan Europe 2007-1, a commercial
mortgage-backed securities (CMBS) vehicle secured on the assets. We
now also know that that this financial engineering failed and QIA
has lost money in the process but that they are still the legal
owners of the homes.
Buying the worlds most famous store -
with its top brands and having races round the block with Ferraris
and Lamborghinis- is all very well except was built on
skimming millions of public money meant to look after
our elderly in care homes and piling it
into off-shore company structures designed to avoid
taxes.
This money which is skimmed
off the top in excessive rents is badly needed in the care
homes to properly look after the residents and pay decent wages to
staff. In some homes GMB members have to use own money for
biscuits to residents in some homes where there is no company money
to buy them.
GMB will continue to demonstrate
until we get action to reduce the freehold rents and end
the tax avoidance company structures. The QIA can not walk
away."
Sharon Holder, GMB National Officer added
“GMB staged this demonstration outside Harrods because GMB
members need answers from the secretive QIA, and also Capita
who represent those who hold asset backed loans.
We need QIA to explain why Southern
Cross, using mainly taxpayers money, seem to be paying
up to £100 million above the market clearing rates in rent to
freeholders of homes acquired by the likes of the Qatari
Investment Authority. This is at a time when the quality of care in
the care homes is at risk due to the high turnover of staff which
results from the low pay and conditions paid to the care home
staff.
We need QIA and the others who
hold the loans secured on the buildings to volunteer to review all
the leases and make some of this money available to properly care
for the residents in the homes. We will seek support from the wider
labour movement on this campaign.”
Ends
Contact: Sharon Holder, GMB
National Officer on 07713 508725 or Paul Clarke 07713 077193 or GMB
Press Office: Steve Pryle on 07921 289880 Photos
available courtesy GMB from Andrew
Wiard07973 219201 or Andrew@reportphotos.com
Notes to Editors
1 Southern Cross- a financial history
timeline
2004 Blackstone
acquires Southern Cross from West Private Equity for £162m. It then
bought NHP for £564m (£1.1bn including debt). NHP managed homes
through its Highfield subsidiary, now owned by Southern Cross and
at the time Southern Cross was one of its largest tenants.
2005 OFT
investigated the NHP takeover by Blackstone believing it to be
anti-competitive, particularly in Nottingham, Arbroath and Port
Talbot. After an investigation OFT did not refer the case to the
Competition Commission. (http://www.oft.gov.uk/shared_oft/mergers_ea02/2005/blackstone.pdf)
2006 Blackstone
floated Southern Cross. NHP bought by Three Delta with funds
provided by the Qatari Investment Authority (QIA) for £1.3bn. The
£1.17bn debt NHP had was sold on to investors packaged as asset
backed bonds and subordinated debt. QIA, through Three Delta,
already owns The Senad Group, Four Seasons Health Care and Care
Principles. It is the performance of these health care investors
coupled with the failed Sainsbury bid which led to the split
between the QIA and Paul Taylors Three Delta investment group.
2007 Blackstone
sold remaining stake in Southern Cross. The ‘buy and build’
technique is understood to have netted a fourfold return for
Blackstone.
2008 Southern
Cross failed to pay back a £46m loan facility, unable to offload
the properties attached to recent purchases. The banks agreed to a
renegotiation but the company were likely to pay higher interest
rates.
2009 NHP in
negotiations over the restructuring of more than £1bn of loans that
have been in default since November 2008. Its portfolio was worth
£243m less than the loans secured on it.
GMB informed that owners of NHP are in
negative equity and QIA have lost a lot on money on the transaction
but are still the legal owners of the homes.
Three Delta big wigs: three non-executive
Directors: Sir Peter Middleton, the former Chairman of Barclays
Bank and Permanent Secretary at HM Treasury, Sir Christopher Howes,
former Chief Executive of the Crown Estate, and Nick Land, former
Chairman of Ernst & Young LLP. David Mellor, former Tory
cabinet minister, was business development director of Three Delta.
The current Business Development Director is Malcolm Le May.
Delta Commercial Property is the name of the
investment arm of Three Delta that acquired Four Seasons Health
Care and the NHP portfolio. The results of NHP Ltd are consolidated
within Libra no 2 Ltd, its immediate parent undertaking.
Qatari Investment Authority was established in
2000 with $40 billion. The fund does not report how much money it
has invested or how much they have added to the fund. As a result,
there is much debate on how much the fund actually has. There have
been estimates of $50 billion and as high as $75 billion. Most
likely it is around $60 billion. The QIA is controlled by Sheikh
Hamad bin Jassim bin Jabr al Thani, the Prime Minister of Qatar.
Due to the private nature of sovereign wealth funds and investment
firms, there is a cloak of secrecy surrounding their activities and
internal affairs, they are government owned and are not officially
answerable to any international body and have no obligation to make
any disclosures about the source of their funding.
Most of the companies involved with Three
Delta are Limited Liability Corporations and as a result, little
and in some cases, no information is publicly available.
Qatari Investment Authority holds a 7.1% share
in Barclays. They have recently taken a share in Porsche and
currently own about 26% of Sainsbury.
2 links between Southern Cross and NHP
Richard Midmer (54), Southern Cross Group
Finance Director
Richard Midmer joined the Company as Group
Finance Director on 1 July 2008. He previously worked in the
oil and gas sector as Finance Director of British-Borneo Oil &
Gas Plc. He joined NHP plc, a quoted care home company, as Group
Finance Director in November 2000 where he worked until its
acquisition by private equity in February 2005.
Nancy Hollendoner (53), Southern Cross
Non-Executive Director
Nancy Hollendoner joined the Board in January
2008. Nancy is a senior adviser on the healthcare market to
Hawkpoint Partners Limited. She previously worked as an equities
analyst specializing in the healthcare market and was employed by
UBS investment bank between 1996 and 2002. Nancy served as a
Non-Executive Director of NHP plc between 2003 and 2005.
Historical:
William Colvin, Non-Executive Director and
Chairman
William Colvin was appointed Non-Executive
Chairman of the Company in March 2005, when the Group acquired the
Highfield Group. He joined NHP PLC in 2000 and became chief
executive later that year. Prior to 2000 he was group finance
director of British Borneo Oil & Gas PLC for seven years. Mr
Colvin currently holds non-executive directorship positions at,
Scottish Care Limited, Energy XXI PLC and BSN Medical. Mr Colvin is
a business and economics graduate from Edinburgh University and he
qualified as a Scottish Chartered Accountant in 1982 at Ernst and
Young.
John Murphy, Group Operations Director
John Murphy joined the Company as Group
Operations Director in March 2005. Mr Murphy has more than 19
years’ experience in operational management in the care sector and
his experience includes working as the group operations director
for Tamaris PLC, managing director of Caledonian Nursing Homes,
chief executive of Idun Health Care Limited, chief executive of
Highfield Care and a member of the board of NHP PLC.
3 Southern Cross Healthcare Major Shareholders
and Directors
|
Major Shareholders Information
|
|
Major Shareholders
|
|
Amount
|
% Holding
|
|
Legal & General Group PLC
|
|
24,229,712
|
12.88
|
|
Deutsche Bank AG
|
|
17,454,198
|
9.28
|
|
Lloyds Banking Group PLC
|
|
9,325,487
|
4.96
|
|
Artemis Investment Management
|
|
9,287,126
|
4.94
|
|
JPMorgan Asset Management
|
|
8,840,518
|
4.70
|
|
Fortis Investment Management SA
|
|
7,681,786
|
4.08
|
|
ING Bank NV
|
|
6,310,483
|
3.36
|
|
Standard Life Invs Ltd
|
|
6,289,756
|
3.34
|
|
Credit Suisse Sec(Europe)Ltd
|
|
6,221,178
|
3.31
|
|
Director's Information
|
|
|
|
Amount
|
% Holding
|
|
Jamie Buchan
|
|
180,039
|
0.096
|
|
Raymond Reginald Miles
|
|
163,837
|
0.087
|
|
Christopher C Fisher
|
|
100,000
|
0.053
|
|
Richard Neil Midmer
|
|
80,344
|
0.043
|
|
Kamma Foulkes
|
|
32,751
|
0.017
|
|
Nancy Jane Hollendoner
|
|
15,919
|
0.008
|
|
Baroness Sally Morgan of Huyton
|
|
2,222
|
0.001
|