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Delancey, the UK fund manager founded by the Ritblat family, has sold the private school company it owned for more than 15 years and set up a new joint venture to invest in midsized logistics properties.
Delancey said in a statement that it had sold 17 of the 20 schools owned and managed by Alpha Plus Group to Inspired, a specialist school company. The schools have 3,300 pupils ranging from nursery age to 18.
Alpha Plus manages private, fee-paying schools, primarily in London. The most famous is Wetherby in Kensington, west London, which was attended by Princes William and Harry and actor Hugh Grant.
Delancey bought the business in 2007 in an unusual deal for a commercial real estate fund manager. Alpha Plus owns a portfolio of freehold buildings across London that was valued at £145M at the end of last year. The aim of the deal is to increase profit by expanding the number of schools it runs, and thus the number of pupils, and by increasing the fees paid by students.
The agreement also includes Wetherby Arts School, a new coeducational senior school set to open in 2025, which will be set in a 60K SF building in the Olympia development in west London. The school will have a focus on the performing arts.
The deal will not include three sixth-form colleges run by Alpha Plus, which educate children aged 16 to 18.
The number of pupils and headline revenue for Alpha Plus increased under Delancey’s ownership, but that increase has not translated into profit.
Revenue for the six months to February 2023 was £64M, up 12% from the same period the year before. Earnings before interest, depreciation, tax and amortisation was £15.1M, 21% higher than the year before, but the company made a pre-tax loss of £5.2M. Impairment charges and the cost of interest turned EBITDA growth into a loss. The losses have been persistent for several years.
The company has an £80M retail bond and £52M of bonds owed to funds managed by Delancey that mature in March next year. According to the latest half-year results, talks to refinance that debt with a new lender are well underway.
The results also showed that Alpha Plus is closing two of its schools because not enough pupils are enrolling: Falcons Prep School in Richmond, south-west London, and the Wetherby-Pembridge school it set up in New York, its first overseas venture. It has already sold the school building in Richmond for £6.7M.
This week, Delancey also announced a new joint venture to buy midsized logistics assets in the UK. It has teamed up with specialist developer and investor Coltham and bought an initial portfolio of five sites in Kings Heath, Redditch, Colnbrook, Milton Keynes and Reading in the south-east of England, which will provide a combined 500K SF.
Delancey said that asset prices in the logistics space had dropped in the last year, but occupier demand remained strong.
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