Assura bolsters its offering with £500m deal for private hospital portfolio

Altrincham-based healthcare property group, Assura, has announced the £500m acquisition of a UK private hospital portfolio from Canadian group, Northwest Healthcare Properties.

The deal, for 14 locations, will be financed by the issue of £100m-worth of shares to Northwest, £266m of debt, which has been refinanced through a new term loan, and £134m using £54m of cash and drawing down £80m from Assura’s existing revolving credit facility.

Each of the 14 locations has an average of 36 registered beds per hospital.

The assets are situated across the UK, with 64% in London.

They have an estimated rental value of £30.2m, three per cent above passing rent, based on thelatest estimated rental value, as of December 2023.

Assura said the acquisition represents a material expansion into the private health market in line with its strategy.

It aims to be the partner of choice for the NHS primary care estate and the target portfolio, combined with its existing exposure to Ramsay Health Care UK and HCA International, will enable the company to access significant relationships with all Tier One healthcare providers operating at scale in the UK.

It added that socio-demographic drivers in the UK, and an NHS system that remains under considerable strain, are leading to growing demand across all three strands of private health – PMI, self-pay and NHS referred services.

Assura recently announced a joint venture with Universities Superannuation Scheme Limited to support investment in essential NHS infrastructure. This, along with the acquisition, will see the group property value increase to £3.2bn.

Jonathan Murphy, Assura CEO said: “The acquisition of Northwest’s high quality UK private hospital portfolio accelerates the delivery of our broader healthcare strategy, securing increased exposure to the structurally supported private healthcare market as we continue to diversify our offering in line with UK healthcare demands.

“The acquired portfolio – with long average lease length of 26 years and index-linked rent reviews – complements our existing assets and will benefit from our sector relationships, development and asset enhancement capabilities as the leading listed UK healthcare property investor and developer.  

“Expected to be earnings accretive in the first full year, the transaction offers attractive financial benefits including sustainable long term top line growth to underpin a covered and progressive dividend policy.”

He added: “While the strength of our balance sheet has supported refinancing at an attractive rate, we intend to reduce our leverage in the next 18-24 months via a targeted disposal programme. 

“The portfolio’s diversified occupier base, combined with our existing private occupier mix, means we now have relationships with all Tier One private healthcare providers. This represents a unique opportunity to participate in the growing demand for private healthcare services to help ease growing NHS waiting lists amidst the ongoing UK healthcare crisis.”

Assura chairman, Ed Smith, said: “The UK healthcare crisis is getting more severe with each year, a point well recognised by the incoming Labour government.

“This worsening crisis is driving increased demand for healthcare infrastructure including private health estates, and today’s acquisition positions us as the clear leader in this sector of the market.

“We are now better positioned than ever to use our expertise and capital to help support the NHS and the country’s wider healthcare market as together we address the health challenges of the modern day.”

 Craig Mitchell, Northwest CEO, said: “These high quality assets represent significant future growth potential buoyed by favourable healthcare market dynamics in the UK and Assura’s sector-leading position, long term relationships and expertise in asset management, development and enhancement.

“Our conviction in Assura and their strategy is evidenced by Northwest taking an equity stake in Assura as part of this transaction, allowing us to benefit from their future success.”

Assura was advised by Barclays Bank PLC, CMS (corporate legal) and Addleshaw Goddard (finance legal).