Southern Cross, Britain’s largest care homes operator, may have far more empty beds than shareholders had previously believed, it emerged yesterday as its shares fell a further 14.5 per cent.

Southern Cross reported the underlying occupancy of its homes in its interim report published in April, but the figure does not include beds it has bought in the past year or beds in homes that are being refurbished or built. The group isreluctant to disclose how many beds this may amount to, and this week it declined to tell the market its occupancy level. It blamed lower than expected occupancy on the number of residents dying. While the definition of underlying occupancy is made clear in a footnote of Southern Cross’s annual report, many in the City have been unaware of it until recently.

One analyst said: “Everyone in the industry has known for months that Southern Cross is in trouble but the market is just waking up to it now.”

Last year, it reported that underlying occupancy was just over 90 per cent. Fears are growing that its true rate is closer to 80 per cent. Another analyst said that it was “extremely plausible” that the occupancy rate of Southern Cross’s 37,200 available beds was below previous estimates.

Shares in Southern Cross have fallen by 75 per cent this week after the company said on Monday that it failed to make a debt repayment.

Southern Cross, which usually buys care homes then sells and leases them back from property companies, has been unable to offload the property attached to some recent purchases in the difficult commercial property market.

That meant that it has not been able to repay a £46 million loan facility, led by Barclays, which was supposed to have been cleared on Monday. The banks have agreed to renegotiate but the company, which owns 8 per cent of beds in care homes in the UK, is likely to have to pay higher interest.

— Advent International, the private equity company, has bought Craegmoor Homes from LGV Capital, the private equity division of Legal & General, for £270 million. The deal will barely cover vendor LGV Capital’s £255 million debt for the company.

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