The Busy Bees nursery group has done a sale and leaseback deal with the Pine Fund for two of its day nurseries in Hertfordshire.

Busy Bees, the UK’s fifth-largest nursery group, has 43 day nurseries offering 4,178 childcare places across England and is the first major provider to use the £50m Pine Fund. The Fund entered the day nursery market last year to buy mature freeholds and portfolios of day nurseries with at least 45 registered places from operators anywhere in the UK. One purchased, it immediately rents the day nurseries back to the operator on a lease of between 15 and 30 years.

John Woodward, director of Busy Bees, said, "We would never have done sale and leasebacks 10 years ago because the cost of the lease compared to the cost of capital was prohibitive. Now, it is a sensible deal to do as the two sale and leasebacks mean that the cost of running the businesses reduces, you haven’t got so much debt sitting there and they are far more sustainable in the long term."

Alan Proto, managing partner of Nexus Pine LLP, the UK manager of the fund, said it was "delighted" to have acquired both nurseries and added, "The management team at Busy Bees quickly understood the value to their business of this type of funding, and we expect to complete further sale and leaseback transactions with them in 2006."

Simon Irons, Busy Bees finance director, said, "The transaction will improve our return on capital and will be used to fund further growth in new nursery opportunities particularly alongside the NHS, which is a key market sector for Busy Bees."

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