RDK publishes annual childcare property update

Redwoods Dowling Kerr (RDK) has launched its 2021 Global Childcare Property Report.

In this year’s edition, Paul Miller, chief executive officer at RDK, talks about trading in a pandemic and how RDK continued to operate during COVID-19, and despite the challenges faced by its clients and itself delivered a total of 43 nursery deals comprising of 60 settings in 2020.

He also outlines his three key expectations for the year ahead:

·Q1 will be a strong quarter for completed transactions – some delayed from early 2020 reawakened during Q4 2020

·It will be a record year for childcare transactions, increase in corporate acquisitions of small groups and high-value single setting nurseries

·Childcare provision is seen as COVID-resilient – this will encourage new entrants to acquire

Andrew K Steen, RDK’s sales and marketing director, highlights the importance of buyer intelligence and how his business incorporates bespoke buyer processes within its intelligence hub to complete sales for clients.

And for an independent perspective, Josh O’Neil, editor of EducationInvestor Global gives his insight on the short-term future impact in the childcare market.

“Even with a vaccine on the horizon, fundamental changes to demand for childcare provision are tricky to forecast accurately,” he says. “Shifts in working patterns ushered in by the pandemic may be permanent. Unemployment will almost certainly rise further. Both of these factors could alter demand levels for some time – and operators in certain regions will feel the pinch more than others. Bright Horizons, the UK’s second-largest nursery operator, has said that occupation will not recover to pre-pandemic levels until the tail end of next year.

“Many mom-and-pop providers will be unable to survive this long. They will be pushed towards insolvency. Or, into the hands of larger, private equity-backed players, which, thanks to ultra-low interest rates, have continued access to cheap debt – an integral component in leveraged buyouts,” adds Josh.

“Private equity investors will always see opportunity amid economic uncertainty. It is what they are paid to do. Armed with a mandate to acquire and hundreds of millions of pounds in the bank, private equity houses can be expected to continue to absorb both cash-strapped and financially healthy childcare providers next year and beyond, expanding their footprints in the UK market.”

You can view a copy of the 2021 Global Childcare Property Report by clicking here