Healthcare property group reveals strong half year and aims to raise almost £200m

Jonathan Murphy

Warrington-based healthcare property group, Assura, today published strong interim results, and details of a fund raising worth almost £200m.

Interim results for the group showed net rental income of £61.1m for the period to September 30, 2021, compared with £54.5m at the same point last year.

Pre-tax profits were £69.3m, compared with £43.8m a year ago.

The portfolio increased six per cent to £2.595bn as at September 30, 2021, compared with £2.453bn at March 2021.

Assura has a growing portfolio of 625 high quality properties (March 2021: 609), serving 6.3 million people across the UK.

There were 27 property additions in the period, for a total cost of £117m and it said its market leading development capability was strengthened by the acquisition of Apollo in February 2021.

·Assura has a total development pipeline of £480m of which £72m is on site.

There were 11 selective disposals completed for proceeds of £15m generating a modest profit over book value.

There are also five asset enhancement capital projects on site for a £3.7m spend, while there were five lease re-gears (£0.2m existing rent roll) and 144 rent reviews completed with a 2.1% uplift.

Total contracted rental income increased to £1.61bn, up from £1.57bn in March 2021.

The group’s pipelines comprise immediate developments of £145m, extended developments of £263m, acquisitions of £102m in legal hands, and asset enhancement capital projects worth £15m.

There are 56 lease re-gears covering £6.7m of existing rent roll in the current pipeline.

Assura issued a 12-year £300m Sustainability Bond with a coupon of 1.625% in June 2021, and, as at September 30, 2021, it had net debt of £1.007bn on a fully unsecured basis, with undrawn facilities of £125m and cash of £241.6m.

Chief executive, Jonathan Murphy, said: “Assura has continued to make strong progress over the past six months.

“We expanded our high quality portfolio with 27 new additions and grew Assura’s market leading development pipeline to a record £480m, building upon our acquisition of Apollo in February.

“Our financial platform remains robust, with a conservative LTV of 39% and our lowest ever cost of debt of 2.30% down 17 bps from last year.

“This is Assura’s eighth year of dividend growth ‒ a testament to our successful strategy, which continues to drive resilient cash flows, strong growth and a positive outlook for the company.”

He added: “The pandemic has shone a light like never before on Assura’s role as the NHS’s partner of choice, supported by our financial strength, sector expertise and mutually beneficial relationships with GPs.

“With capacity constraints and health inequalities having been exacerbated significantly in the last 18 months, the provision of the high quality community healthcare that Assura delivers has become more important than ever.

“With our leadership position we are also well positioned to adapt to emerging trends within the sector, such as the growing digitalisation at our sites and remote diagnosis.

“Most recently, more than 87,000 people benefited from our social impact strategy, SixbySix, from improvements to and through our healthcare buildings in the half-year period and as COP26 draws to a close we continue to play a key role in supporting the NHS’s commitment to become the world’s first net zero healthcare system.

“Today, we are also proposing an equity raise of approximately £190m, to fund additional investment in our development pipeline, acquisitions and asset enhancements. This will help us to further build on our strong track record of delivering growth, supporting the NHS and increasing shareholder value.”

Assura is conducting an accelerated bookbuild, of up to 267,554,740 new ordinary shares (placing shares), representing up to approximately 10% of the company’s existing issued share capital, which is expected to raise gross proceeds of approximately £190m.

And the company announced it is also conducting a retail offer of up to the sterling equivalent of €8m of new ordinary shares at the same price as the placing shares through the Primary Bid platform.

The group will use the proceeds to source investment opportunities and it expects to continue to replenish its pipeline of acquisitions and development opportunities.

Mr Murphy said: “The NHS has been put under significant strain by COVID, which has highlighted capacity constraints in hospitals, increased waiting lists, and exposed older buildings as inadequate for current healthcare requirements.

“Assura’s experience, built up through years of close engagement with the NHS, means we are well positioned to deliver the future innovative community buildings this country needs and support the NHS’s response to key societal themes, including digitalisation, the integration of healthcare systems and mental health support.

“Assura is proud to have invested over £1bn into primary care properties since April 2017, and currently has a strong pipeline of opportunities in which to invest to further support the vital health services delivered in a community setting.

“Assura’s market leading development capabilities allow us to access a growing pipeline of development opportunities, including in emerging areas such as diagnostic treatment centres, mental health support and with providers of primary care at scale, and helps us access scale benefits which drive returns and support our dividend policy.”

Assura announced shortly before the close of trading that it had raised gross proceeds of approximately £182m.

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