The day nursery market has been one of the fastest growing sources of employment in the UK over the last five years, with sector turnover last year in excess of £3bn.
Day Nursery operators can now tap into a £50 million fund; the PINE Fund, which is offering sale and leaseback funding on freehold day nursery units.
The fund is a Jersey-based unit trust whose principal investors are funds managed by Electra Partners and Nexus Structured Finance. Its UK manager is Nexus PINE, whose partners are Alan Proto and Harry Hyman.
Over the last eighteen months, the Fund has concluded sale and leaseback transactions involving forty-three nurseries across the UK. The Fund has purchased these settings for some £48.5m, and has then leased these units back to their current operators. Vendors have included two of the top five UK nursery operators, as well as the largest independent operator in Scotland, stand-alone settings and smaller regional chains. The Fund has a further £15m of transactions currently in the pipeline. This volume of business underlines the popularity of the sale & leaseback product offered by the Fund with all types of nursery operators from every part of the UK.
The PINE Fund concentrates on purchasing mature freeholds and portfolios of day nurseries with a minimum of 45 registered places from operators anywhere in the UK. Once purchased, the fund immediately rents the day nurseries back to the operator on a 15 - 30 year lease.
The PINE Fund allows fast-growing nursery groups to raise the maximum amount of funds to pay for further construction or acquisitions. As well as funding existing day nurseries owned by an operator, it can provide finance for groups to acquire units from other operators too.
A sale and leaseback to the PINE Fund provides the operator with more funds than traditional debt finance can provide, at a lower overall cost than by using a combination of debt and private equity funding.
Commonplace in other market sectors, this type of sale and leaseback funding has not previously been widely available to the nursery sector. The PINE Fund has been established to fill this gap.
