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Southern Cross - Divests freehold for Â£30m

October 2007

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

In line with its policy of releasing as much capital from its properties as possible, care home operator Southern Cross has divested its freehold interest in nine care homes for £30m. At the same time it has also exercised a call option to acquire a further five homes from the same vendor. The homes, which are based in Scotland, add a further 284 beds to its portfolio. Meanwhile, Southern Cross is marketing the freeholds, acquired by its £96m acquisition of Avery in June, for sale and leaseback, with the proceeds likely to be ploughed back into yet more eps enhancing acquisitions. UBS has left its price target at 660p. Tipped at 303p in November ‘06 we think the shares have further to go. Strong ho ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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Southern Cross - Divests freehold for Â£30m

October 2007

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