Assura achieves £200m disposal milestone in bid to reduce net debt
Altrincham-headquartered healthcare property investor Assura has sold seven assets for £64 million into a healthcare joint venture it owns a share in.
This brings their disposals since the start of the financial year to 30 for a total amount of £200 million, at a weighted average net initial yield of 4.8%.
The proceeds will be deployed to reduce the acquisition debt used to finance the £500 million private hospital portfolio acquired in August 2024 at 5.9% yield on cost and is part of Assura’s overall debt reduction plans.
In a statement to the stock market this morning Assura said the sale reinforces that the quality of their portfolio and insisted the resilience of its underlying cash flows remain highly attractive to the investment market.
Jonathan Murphy, CEO, said: “Reaching this £200 million milestone in our disposal programme means we are on track to achieve our target of net debt to EBITDA below 9 times and LTV below 45% well ahead of the previously outlined timetable. This accelerated delivery and our ability to achieve sales is testament to our operational excellence and the quality and attractiveness of our property portfolio.
“The disposal programme was announced at the time of our transformational acquisition of high-quality private hospital assets in August 2024. The acquisition has positioned Assura as a leader in a structurally supported market, and has cemented our position as the UK’s leading diversified healthcare REIT offering an attractive investment opportunity into favourable long-term trends.”
Last month private equity investor KKR made a series of audacious bids for Assura offering a 28% premium to current trading, which the board rejected, with mixed reactions from shareholders.
“The board’s reaction to KKR’s bid was somewhat surprising, given that Assura’s shares had been trading well below net asset value for some time,” said Marcus Phayre-Mudge, fund manager at TR Property Investment Trust.
While others others backed the board.
Romney Fox at Abrdn, a top 10 shareholder with a 2.9% stake in the company, said: “This country has a major healthcare crisis, the health secretary has specifically stated that more community healthcare space is part of the solution, and this is just the type of space that Assura, as the UK’s largest healthcare REIT, provides. The interest rate cycle has been tough on the value of property over the last few years, but we are now seeing signs of a recovery, so Assura should not rush into the arms of a suitor other than at a compelling price.”
Matthew Norris, head of real estate securities at Gravis, a top 20 shareholder, said: “There is exceptional rarity value to Assura, and the board is absolutely right to unanimously reject the approaches to date. Assura’s management team have built up a group with a leading portfolio of 600 healthcare assets, and with a very strong development capability. There is a clear strategy for the group, which means it is in a prime position to provide the critical healthcare infrastructure the NHS so badly wants and needs. So why would the management team want to sell the group on the cheap?”
The seven assets disposed of today have been sold into Assura’s £250 million joint venture with pension fund USS, which was party to two of KKR’s bids.
Assura retains a 20% equity interest in the joint venture resulting in net proceeds of £51 million. Following this transaction, the joint venture has gross assets of £172 million. Assura continues to act as property and asset manager to the joint venture, receiving management fees linked to the valuation of the portfolio.
The partnership was formed in May 2024 between USS, the principal pension scheme for universities and higher education institutions in the UK with over £75bn of assets under management, and Assura, the specialist healthcare property investor and developer.
It has an initial term of 20 years and focuses on assets let directly to NHS or GP tenants with rents linked to inflation or with fixed uplifts.
