GMB Demonstrate At Harrods Over Qatari Investment Authority Overcharging Rents on Care Homes

19 Aug 2010

This overcharging on freehold rents is a right royal Qatari rip- off of Britain’s elderly and Qataris have a legal, moral and ethical responsibility to help the care home residents says GMB

GMB, the union for staff at Southern Cross care homes for the elderly, today staged a demonstration outside Harrods in protest at the overcharging of rents on the freeholds of properties acquired by the Qatari Investment Authority (QIA) in 2006 and used as care homes by Southern Cross. In May the Qatari Investment Authority acquired Harrods, the up market department store in Knightsbridge in London

The demonstration took place outside Harrods in Knightsbridge, London.  Photos available courtesy GMB from Andrew Wiard 07973 219201 or .(JavaScript must be enabled to view this email address)

On the demonstration, with banners and placards, were GMB members and family members of residents in the care homes. Slogans on the demo wer “stop the right royal Qatari rip- off of Britain’s elderly” and “QIA need to renegotiate the leases to leave money for the care home residents”.

GMB estimate that rents for the 744 Southern Cross care homes are £100m higher than they should be. QIA acquired the freehold in up to half of the homes in 2006 and are still the legal owner of them. See Notes to Editors on a financial history of Southern Cross and QIA links.

In January 2010 GMB wrote to councilors on a number of councils to bring to their attention GMB’s concern about high rents charged by the owners of buildings, including QIA. used as Southern Cross Care Homes and the lack of transparency regarding who owns the care homes and the financial returns to the ultimate owners of the properties. 

There are 744 Southern Cross Care Homes in the UK with a total of 38,124 care beds for the elderly (September 2009).The published accounts for that period showed that in 2009,Southern Cross paid £239.1m in rent to the owners of the properties. GMB research indicates that up to half of the properties were acquired by a company called NHP, of which the ultimate parent company is Delta Commercial Property. This is a company owned by the Qatari Investment Authority and is registered in the Isle of Man. The financial returns for this company are consolidated within Libra No.2 Ltd, a company incorporated and registered in the Cayman Islands.

Southern Cross rents paid to the homes acquired by QIA in 2009 equated to £6,348 per bed. This was a 4.9% increase on the 2008 figure when the rent was £6,050 per bed. This in turn was a 3.1% increase on the 2007 figure when the rent per bed was £5,866. This in turn was a 7.9% increase on the 2006 figure when the rent per bed was £5,435. Thus in the past 3 years rents have gone up by 16.8% at a time when property values were falling.

GMB have told the councilors that use Southern Cross to care for their clients, paid for with public money, that if the beds were used for different purposes the market clearing rents paid to the landlords would at least £100m less. If the accommodation was used for students, for example, GMB conclude that the total amount the landlords would receive is £121.8m.If the space were made available for private residential use, GMB consider that this would give rise to £139.5m in annual rental income.

Paul Kenny GMB General Secretary said “This overcharging on freehold rents, built in to the original deal by private equity in 2006, has been a right royal Qatari rip- off of Britain’s elderly. The Qataris have a legal, moral and ethical responsibility to help the care home residents caught up in a property gamble that has gone wrong.

The QIA gambled huge sums of money in the property market with the lives and welfare of tens of thousands of vunerable UK pensioners who are in care- many of them fought in the war for their country. These pensioners are just pawns for QIA in the high world of finance and the offshore tax havens.

GMB are seeking a meeting with the QIA for them to explain to us who actually controls the pensioners beds that QIA still legally own and where the sky high rents still being paid are going.

We know that QIA packaged the loans it raised after it acquired the homes and them arranged into a vehicle called Titan Europe 2007-1, a commercial mortgage-backed securities (CMBS) vehicle secured on the assets. We now also know that that this financial engineering failed and QIA has lost money in the process but that they are still the legal owners of the homes.
Buying the worlds most famous store - with its top brands and having races round the block with Ferraris and Lamborghinis- is all very well except was built on skimming millions of public money meant to look after our elderly in care homes and piling it into off-shore company structures designed to avoid taxes.

This money which is skimmed off the top in excessive rents is badly needed in the care homes to properly look after the residents and pay decent wages to staff. In some homes GMB members have to use own money for biscuits to residents in some homes where there is no company money to buy them.
GMB will continue to demonstrate until we get action to reduce the freehold rents and end the tax avoidance company structures. The QIA can not walk away.”

Sharon Holder, GMB National Officer added “GMB staged this demonstration outside Harrods because GMB members need answers from the secretive QIA, and also Capita who represent those who hold asset backed loans.

We need QIA to explain why Southern Cross, using mainly taxpayers money,  seem to be paying up to £100 million above the market clearing rates in rent to freeholders of homes acquired by the likes of the Qatari Investment Authority. This is at a time when the quality of care in the care homes is at risk due to the high turnover of staff which results from the low pay and conditions paid to the care home staff.

We need QIA and the others who hold the loans secured on the buildings to volunteer to review all the leases and make some of this money available to properly care for the residents in the homes. We will seek support from the wider labour movement on this campaign.”

GMB Targets Qatar.doc