Landlords in talks over Southern Cross homes

Landlords of loss-making care home operator Southern Cross are in talks with rival companies to transfer management of the facilities after it unilaterally decided to defer part of its rental payments.

Tony Banks, founder and chairman of Balhousie Care Group, told The Scotsman he has been approached by several of Southern Cross's landlords about taking on parts of the company's Scottish portfolio.

He said no government bail-out is likely to be needed, as the homes can be run profitably by other companies, a move he said would be positive for residents.

"Over the last few months landlords have not been sitting quietly," he said. "They have been actively talking to other operators with a view to carving this company up with regional operators taking over the leases, purchasing the homes, running them as joint ventures with the landlords or operating them under a management type contract.

"Now Southern Cross is in breach, (its landlords] will use the terms of the contract on the leases to take the properties back. As far as I'm concerned that process has already started."

Southern Cross, which looks after 31,000 elderly residents across the UK, announced this week it would be reducing its rent payments by a third as it can no longer afford to meet the annual rental costs of 230 million on its 750 care homes.

Banks, who founded Balhousie in 1991 and has built it up to run 22 care homes across Scotland with over 800 residents and almost 900 staff, said that the process of transferring management or ownership of the homes should be smooth for residents, with many staff also likely to be retained, although their terms and conditions would be scrutinised by their new employers.