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 Management Limited run from its offices in London and Woking.
To date the Fund has concluded sale and leaseback transactions involving forty-three nurseries across the UK.
The Fund has then leased these units back to their current operators. Tenants of the fund include four of the top ten nursery providers in the UK. This volume of business underlines the popularity of the sale & leaseback product offered by the Fund with nursery operators fthroughout the UK.
The PINE Fund has concentrated on purchasing freehold mature 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 operators on 25 - 30 year leases.
The sale and leaseback model 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 can provide 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.
