Tomorrow is the deadline for Southern Cross landlords to acquiesce to rent reductions on 750 homes leased by the near-bankrupt care home operator. Today the story was finally shoved under the noses of the City, with a front page article in the FT on this tale of greed and obduracy. Will the unknown recipients of £250 million a year in rents agree to cuts of 20-30%? You would think so. But negations have been going on for many months. Clearly some landlords holding upward only 30-year leases would rather Southern Cross went bust. After all, somebody is bound to look after the 30 000 elderly occupants, aren't they? So, what does it matter?
The management of Southern Cross has played a poor hand badly. They have failed to put forward their side of a strong PR case. Why not let the world know the gory details of the millions made by West LB who helped assemble the collection of care homes. How about Blackstone? The US equity house put together a flotation of business at 300p a share in March 2007, a price based on new leases guaranteeing upward only rents, lumbering Southern Cross with lease liabilities of £4.9 billion. Why not let the world know who these landlords are? After all, they will appear in the list of creditors if the company goes bust tomorrow.
On a calmer note, the Daily Telegraph today rather buries the fact that British Land and London & Stamford are having a row about over the valuation of 74 acres of land at Meadowhall, the giant northern shopping centre they co-own. It has been known for a while that a 700 000 sq ft extension to the 1.4m sq ft centre on the M1 near Sheffield was planned. Patrick Vaughan and Raymond Mould of L&S want to exercise their option to buy the land at "market value." BL think the plot destined to take an IKEA is worth £20 million. The two gentlemen of L&S clearly disagree. So, the matter is to go to arbitration says the Telegraph.