Assura to double development pipeline
WARRINGTON healthcare landlord Assura is expecting to double the annual amount it invests in new GP surgeries to £60m.
Chief executive Graham Roberts believes there is scope for rapid growth as the UK’s 8,500 GP practices update their premises.
Mr Roberts joined the group in March after spending 10 years as finance director at London-based property group British Land.
He was brought in by new chairman Simon Laffin who cleared out the old board, including former chief executive Nigel Rawlings, after the group incurred a £62m liability on an interest rate swap with National Australia Bank.
Mr Roberts told TheBusinessDesk.com Assura, which employs 25 people, was operating in a growth market as the Government is keen to see GPs upgrade their surgeries to take pressure off hospitals.
“In order to help get NHS budgets down they need to build more modern surgeries where they can do things like minor procedures,” he said. “They have to build more community-based medical centres.”
He added: “A little known fact is 85-89-year-olds visit their local GP 13 times a year but we’re going to have a hell of a lot more 85-89-year-olds visiting GPs once a month and we [the UK] haven’t got the facilities to deal with that.”
Under the Government’s health and social care bill primary care trusts will be abolished and spending power will shift to GPs. Mr Roberts said the upheaval had slowed down new development decisions but this should change next year.
“At some time in the next 12 months I expect a pick up in approvals,” he said. “We might be 12-18 months away from higher approvals.
Assura, quoted on the London Stock Exchange, is one of the biggest public companies operating in this field with around 160 surgeries with a total value of £520m. Its closest competitors are PHP and Medicx.
The three have around 400 properties and a similar number are held by private landlords. But Mr Roberts estimates there are around 7,500 surgeries with a total value of £10bn.
GPs’ rents are paid by the Government, and this, together with the scale of the potential development pipeline, has made it easier for Assura to attract development finance. A year ago the group raised £110m through a 10-year secured bond and it borrows from the insurer Aviva.
“They are very happy to lend to the sector,” said Mr Roberts. “We borrow 21-year money at 200 basis points over the gilt – around 4% – and that’s helping me fund developments which are yielding 7% on costs.”
