Fennies Day Nurseries Limited

The Challenge

• We were appointed by a high street lender to value the Fennies portfolio of day nurseries which are clustered in affluent south east locations. At the time, the portfolio comprised well-established and very profitable nurseries, together with new settings at different levels of maturity having only very recently opened, and a site under construction.
• We have since also been instructed by Fennies’ lenders to value new acquisitions of freehold and leasehold nurseries, as they have been acquired over the past five years. The Fennies group has doubled, growing from 8 nurseries to 16, since our initial engagement.

The Solution

• To arrive at our opinion of value as trading nurseries, we undertook a forensic analysis of the historic trading performance of the established nurseries, together with Fennies’ own projections
• For the nurseries which had only recently opened, we had assessed the future trading potential, having regard to sustainable levels of trade, demand for nursery places in the catchments and competitor fees. We arrived at our opinion of sustainable trade and undertook discounted cash flows, making an assessment on the time taken to reach mature levels of trade for the different sites, depending on the unique locational supply and demand characteristics.
• For the new / vacant sites, we valued them as they were acquired, having regard to comparables of vacant nurseries and then also undertaking residual valuations.
• Fennies’ revenue and profit has increased year on year, as the nurseries have been bought, developed, opened, and reached mature levels of trade. Thus, we have been required to be agile and responsive in our reporting of valuations to the lender, continually updating our valuation advice as the trading activity has grown.

The Result

• The valuation work for Fennies’ lenders has bolstered our impressive credentials in the nursery sector, with Gerald Eve now being regarded as valuer of choice for lenders and investors into the sector, and also for the some of the best operators, with an impressive track record and client list.
• We are delighted that we are considered to be a critical part of the deal team, with our reports to lenders supporting the acquisitions of sites for new nurseries, enabling the Group to expand into one of the best operators in the sector.
• Our valuations supported the debt facility which enabled Fennies’ rapid expansion to a medium sized Group, to winner of ‘Nursery Group of the Year’ at the recent National Nursery Awards.