The Blackstone Group is getting blasted by union representatives in the United Kingdom after one of its former investments, Southern Cross, finds itself in financial trouble reports the New York Times Dealbook.
Southern Cross, which houses more than 31,000 elderly people, said this week that it would have to defer 30 percent of its rent on its nursing homes for three months to stay in business. Blackstone acquired the company in a leveraged buyout in 2004 for £162 million, or $266 million, and sold it two years later with a fourfold return reports Dealbook.
Some analysts say one of Southern Cross’s problems is its set of long-term rental agreements with prices that can only be negotiated up. Southern Cross signed some of the agreements while owned by Blackstone, which also owned its biggest landlord, NHP.
Blackstone denied any role in the company’s current troubles. In a statement Thursday, Blackstone said 95 percent of the nursing homes run by Southern Cross in 2006 operated under leases arranged before Blackstone’s investment.
“During Blackstone’s ownership, the company experienced growth and profitability and was healthy at the time of its I.P.O. and was viewed as one of the highest quality operators in the sector,” Blackstone said in the statement.