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May 30, 2011 4:16 pm

The opco-propco: How it works

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The crisis in Britain’s care homes has been revealed in an FT investigation. Some private-sector companies that piled into the sector are struggling with their financial miscalculations amid fresh evidence that they provide worse quality care than their non-profit rivals

Southern Cross, Britain’s biggest care home company which looks after 30,000 people, must persuade its landlords to cut its rents by June 1 or risk financial collapse.

The company’s plight is the result of misguided property deals to fund rapid expansion and underinvestment in its homes.

Sarah O’Connor explains how care home providers have sown the seeds of their own demise, using a sell and lease-back scheme called “opco/propco”.

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