Assura Healthcare Reports Strong Strategic Progress

Assura Healthcare has today reported significant progress across its strategic objectives in a trading update that reinforces its position as a leading healthcare real estate investor, with a focus on sustainable growth and portfolio expansion.

The company has successfully completed the acquisition of a portfolio of 14 private hospitals for £500 million. This acquisition provides a day-one rental income of £29.4 million, with a WAULT (Weighted Average Unexpired Lease Term) of 26 years. All properties are subject to annual index-linked rent reviews and are fully leased to tier 1 private healthcare providers, with strong rent cover of 2.3 times. This acquisition further strengthens Assura’s long-term income profile.

Following this transaction, Assura’s property portfolio now stands at 625 assets, representing a significant expansion from its previous count in March 2024. The annualised rent roll has increased to £179.1 million, a substantial rise from £150.6 million earlier this year. This marks a clear step forward in the company’s ongoing commitment to growth in the healthcare infrastructure sector.

Assura has also made notable progress in its development pipeline, completing three new developments with a total spend of £46 million. These projects include a GP surgery in Shirley, an ambulance hub in Bury St Edmunds, and the company’s largest in-house project to date, the Northumbria Health & Care Academy at Cramlington. These developments align with Assura’s strategic aim to enhance healthcare service provision across key areas.

In the first half of the year, Assura completed 129 rent reviews covering £20.4 million of existing rent, generating an uplift of £1.7 million. This represents an 8.2% increase on the previous passing rent, with an annualised basis uplift of 3.0%. These positive outcomes underline Assura’s ability to enhance income across its portfolio.

The company has completed seven asset enhancement projects with a total spend of £3.0 million and seven lease regears covering existing rent of £0.6 million. Additionally, Assura is currently on-site with four more capital projects, which represent a further investment of £5.6 million. These projects are part of the company’s ongoing asset management strategy aimed at improving the value and longevity of its properties.

Assura has also announced a 2.4% increase in its quarterly dividend, raising it to 0.84 pence per share. This follows the full-year results and reflects the company’s strong financial performance. The dividend increase will take effect from the July 2024 payment.

Looking ahead, Assura is making significant progress on its pipeline of opportunities for strategic expansion. Advanced discussions are taking place for the disposal of 12 assets, while five developments are currently on-site, with a total cost of £44 million, of which £27 million remains to be spent. Notably, two of these developments are net-zero carbon buildings, including a GP medical centre and an NHS children’s therapy centre. Assura is also engaged in three developments for the Health Service Executive (HSE) in Ireland.

The company has a pipeline of 14 capital asset enhancement projects with a projected spend of £8.8 million over the next two years. In addition, 32 lease regears, covering £3.9 million of existing rent, are currently in the pipeline, ensuring Assura remains well-positioned for future growth.

Assura continues to maintain a strong financial position, with a weighted average interest rate of 3.0%, up from 2.3% in March 2024. The company has a weighted average debt maturity of 5.1 years, with limited refinancing required on drawn debt over the next three years. Over 40% of Assura’s drawn debt matures beyond 2030, with the longest maturity debt at the company’s lowest rates. In August, Fitch reaffirmed Assura’s A- credit rating following the acquisition of the private hospital portfolio.

As of September 2024, net debt stands at £1,575 million, up from £1,217 million in March 2024, with cash and undrawn facilities amounting to £143 million.

Assura will announce its full results for the six months ending 30 September 2024 on 14 November 2024, where it will provide further insight into its performance and strategic progress for the year.

Jonathan Murphy, CEO at Assura Healthcare, said: “We have made strong strategic progress in the first half of the year. The £500 million acquisition in August of a private hospital portfolio accelerates the delivery of our broader healthcare strategy while our £250 million joint venture with USS diversifies our funding. We are also very pleased to have been certified as the first FTSE 250 B Corp recognising our high standards of social and environmental performance.

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

“The need for investment in healthcare infrastructure was starkly outlined by the recent Lord Darzi report – which found the primary care estate to be plainly not fit for purpose and more than 1 million people to be waiting for community services. We are at an inflexion point in the UK, with structural changes to the delivery of healthcare services, the Government targeting preventative services in a community setting, and rising demand for private providers. Assura has firmly positioned itself to facilitate this change, being well-placed to work with all healthcare providers to deliver high-quality, sustainable facilities for the long-term..”