Assura reports strategic growth with £500m hospital acquisition and B Corp certification

Assura plc (LON:AGR), the diversified healthcare REIT, has announced its trading update for the six months ended September 30, 2024.

Jonathan Murphy, CEO, said:

“We made great strategic progress in the first half of the year. The acquisition of a £500m private hospital portfolio in August accelerates the delivery of our wider healthcare strategy, while our £250m joint venture with USS diversifies our funding. We are also delighted to be certified as the first FTSE 250 B Corp, recognizing our high standards of social and environmental performance.

“The acquisition of 14 UK private hospitals significantly increases our exposure to the structurally supported private healthcare market as we continue to diversify our offering to meet the changing needs of UK healthcare. The joint venture with USS, the UK’s leading private pension scheme, provides a new source of funding and opportunities to return capital to our growth pipeline.

“The need for investment in health infrastructure was clearly set out in Lord Darzi’s recent report – which found that primary care facilities are clearly not fit for purpose and more than a million people are waiting for community services. We are at a turning point in the UK: structural changes to the delivery of healthcare services, the government targeting preventative services in a community setting and demand for private providers increasing. Assura is firmly positioned to enable this change and is well placed to work with all healthcare providers to deliver high quality, sustainable facilities for the long term.”

Delivering in line with our strategic goals

• Portfolio of 14 private hospitals acquired for £500m: first day rental income of £29.4m, WAULT of 26 years, 100% subject to annual index-linked rental reviews, leased to Tier 1 private healthcare providers with strong rental coverage of 2, 3 times

• Portfolio now comprises 625 properties with an annual rental value of £179.1m (March 2024: £150.6m)

• Three developments completed with a total expenditure of £46 million; GP Practice in Shirley, Outpatient Center in Bury St Edmunds and our largest internal development project to date at Northumbria Health & Care Academy in Cramlington

• Positive progress in rent reviews: 129 completed in the first half, covering £20.4m of existing rent and resulting in an increase of £1.7m (8.2% increase on previous transition rent, 3, 0% on an annual basis).

• The transfer of the first tranche of seven assets to a joint venture with USS has been agreed

• Completion of seven asset improvement capital projects (total expenditure £3.0m) and seven lease redesigns (existing lease £0.6m); on site with a further four capital projects (total spend £5.6m)

• The quarterly dividend was increased by 2.4% to 0.84 pence per share, effective from payment in July 2024, as announced at the full year results

Pipeline of opportunities for strategic expansion and further growth

• Advanced discussions are underway to sell 12 assets

• Currently with five developments on site; The total cost is £44m, with £27m still to be spent. On-site projects include two net zero carbon buildings in the UK (a GP medical centre, an NHS children’s therapy centre) and three developments for the HSE in Ireland.

• Pipeline of 14 capital value improvement projects (planned spend: £8.8m) over the next two years

• 32 new lease agreements covering £3.9m of existing rent are in the current pipeline

Strong and sustainable financial position

• Weighted average interest rate 3.0% (March 2024: 2.3%); all debts availed on a fixed interest basis

• Weighted average debt maturity of 5.1 years, limited refinancing of utilized debt over the next 3 years. Over 40% of leveraged debt has a maturity beyond 2030, with our longest-dated debt having our lowest interest rates

• A- rating confirmed by Fitch in August following acquisition of private hospital portfolio

• Net debt of £1,575m (March 2024: £1,217m) on a fully unsecured basis with cash on hand and undrawn credit lines of £143m

Assura’s full results for the six months ended September 30, 2024 will be announced on November 14, 2024.