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Key Points:
- Assura acquired a portfolio of 14 private hospitals for £500 million, generating a rental income of £29.4 million.
- The company’s portfolio now includes 625 properties, with an annualized rent roll of £179.1 million, marking significant growth.
- Assura has a strong financial position with a weighted average interest rate of 3.0% and a reaffirmed A- rating from Fitch.
Assura plc (LSE:AGR), a diversified healthcare Real Estate Investment Trust (REIT), has announced its Trading Update for the six months ending September 30, 2024. The report highlights significant progress towards the company’s strategic objectives, showcasing its growth in portfolio, revenue, and operational developments.
Key Achievements
Acquisition of Private Hospitals
Assura has successfully acquired a portfolio of 14 private hospitals for £500 million. This acquisition is expected to generate a day one rental income of £29.4 million, underpinned by a Weighted Average Unexpired Lease Term (WAULT) of 26 years. All properties are subject to annual index-linked rent reviews and are leased to tier 1 private healthcare providers, which boast a robust rent cover ratio of 2.3 times.
Growth in Portfolio and Rental Income
The company’s total portfolio has expanded to 625 properties, resulting in an annualized rent roll of £179.1 million, a significant increase from £150.6 million reported in March 2024. This growth is a testament to Assura’s strategic focus on enhancing its healthcare property offerings.
Successful Development Projects
In the first half of the year, Assura completed three significant developments with a combined investment of £46 million. The projects include a new GP surgery in Shirley, an ambulance hub in Bury St Edmunds, and the Northumbria Health & Care Academy in Cramlington, which is the company’s largest in-house development to date.
Rent Review Progress
Assura has made positive strides in rent reviews, settling 129 cases in the first half, covering £20.4 million of existing rent. This has resulted in an uplift of £1.7 million, representing an 8.2% increase on previous passing rents, equivalent to an annualized uplift of 3.0%.
Ongoing and Future Initiatives
Joint Venture and Asset Disposal
The company has agreed on the initial tranche of seven assets for transfer to a joint venture with the Universities Superannuation Scheme (USS). Additionally, discussions are ongoing for the disposal of 12 assets, indicating a proactive approach to managing its portfolio.
Development Pipeline
Assura is currently engaged in five development projects with a total cost of £44 million, of which £27 million remains to be spent. These projects include two net zero carbon buildings in the UK—one for a GP medical centre and another for an NHS children's therapy centre—as well as three developments for the Health Service Executive (HSE) in Ireland.
Future Asset Enhancements
The company has identified a pipeline of 14 capital asset enhancement projects, with a projected spend of £8.8 million over the next two years. Furthermore, 32 lease re-gears covering £3.9 million of existing rent roll are in the pipeline, indicating ongoing efforts to optimize the portfolio.
Strong Financial Position
Assura has maintained a strong financial position with a weighted average interest rate of 3.0%, an increase from 2.3% in March 2024. Importantly, all drawn debt is fixed rate, ensuring stability amid changing interest rates. The company has a weighted average debt maturity of 5.1 years, with limited refinancing needs over the next three years. Notably, over 40% of drawn debt matures beyond 2030, providing a buffer against potential financial volatility.
Fitch reaffirmed Assura’s A- rating in August, following the acquisition of the private hospital portfolio, underscoring the company’s strong creditworthiness. Assura’s net debt stands at £1,575 million (up from £1,217 million in March 2024), with available cash and undrawn facilities totaling £143 million.
