Wren fixes Bahamian funding

01/12/2009 Robert Tyerman

Wren Extra Care, steered by CEO Paul Treadaway, is establishing a presence in the fast-growing 'extra care' market

Wren Extra Care Group has arranged a £3 million equity draw down deal with Bahamas-based Brittany Capital Management.

The Surrey-based company, formerly retirement homebuilder Wren Homes, has agreed the ‘equity purchase agreement’ with Brittany, advised by US group Southridge as part of a £7 to £10 million funding drive to power the company’s planned build-up of a significant portfolio of residential homes for the elderly in the M25 corridor. AIM-quoted Wren will have discretion about when to issue shares to Brittany under the agreement, at a 10 per cent discount to prevailing market prices, with a maximum individual draw-down size of £100,000.

Steered by chief executive officer Paul Treadaway, Wren is seeking to establish a presence in the fast growing Extra Care market, which fills the gap between retirement homes and long-term care at a cost to residents equivalent to less than half the £50,000 typical annual cost of long term care. Extra Care offers old people their own individual homes, bought or rented, near the centres of small towns with restaurants, laundries, coffee bars, treatment rooms, gardens and other communal facilities and Wren will provide its own manager for each scheme, though initially it is outsourcing this service with Allied Healthcare.

The company, which decided to pull out of the conventional retirement home market at the top of the property boom in 2007, is seeking funding for three extra care developments for which it has obtained planning permission, Warlingham, King’s Langley and Crowborough. With demographics strongly in their favour, Treadaway and his colleagues envisage a tempting potential profit of between £11.2 million to £12.4 million on total costs of £26.5 million for these three projects together and are putting together a further pipeline of similar schemes.

Floated at 36p in 2006, Wren shares hit 75p the following year before plunging to 5p in the credit crunch and property slump. Now 9.25p, valuing the company at £4.85 million, they should recover further if Treadaway’s strategy pays off.

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