Assura plc - Interim Results 2018

Continued growth of the portfolio

·      6% increase in investment property to £1.8 billion (March 2018: £1.7 billion)

·      39 properties added to the portfolio in the six months at a combined cost of £108 million (rent £5.5 million and WAULT of 13.3 years), and a further £50 million on three properties immediately after the period end

·      0.6% growth in diluted EPRA NAV per share to 52.7 pence (March 2018: 52.4 pence)

·      7% increase in rent roll to £97.0 million (March 2018: £91.0 million)

Delivering for investors

·      36% increase in EPRA earnings to £31.7 million (September 2017: £23.3 million)

·      EPRA EPS of 1.3 pence (September 2017: 1.3 pence)

·      IFRS profit before tax of £37.4 million (September 2017: £73.4 million) reduction reflecting lower revaluation gains

·      Dividends paid in the period 1.3 pence (September 2017: 1.2 pence)

·      5% increase in dividend from January to 0.685p per quarter

Strengthened balance sheet enabling long-term low interest rates to be secured

·      Assigned rating of A- (stable outlook) by Fitch Ratings Limited and completed issuance of £300 million unsecured listed bond with tenor of 10 years and interest rate of 3% per annum

·      Weighted average cost of debt 3.28% and weighted average debt maturity 8.0 years (March 2018: 3.12% and 6.0 years respectively)

Well positioned, sector leader in a market that is in significant need of investment

·      Current LTV of 30% (March 2018: 26%) giving significant headroom for future investment

·      Strong pipeline (defined as opportunities currently in legal hands) with £189 million of acquisitions and developments

·      Scalable internally managed operating model, with in-house development team

·      Consensus that primary care must play a bigger role in health provision

·      Significant underinvestment in the nation's primary care premises, many GP premises not currently fit for purpose

·      Group operates in a highly fragmented market: portfolio of 556 medical centres compares with a total UK market of approximately 9,000 surgery buildings


Jonathan Murphy, CEO, said:

"We have continued to deliver on our investment plan in the first half of the year, which has seen us grow our portfolio, refresh our pipeline of acquisition and development opportunities, strengthen our balance sheet and achieve an investment grade rating of A-.  The performance of the business and our confidence in the outlook is reflected in our decision to raise the dividend by 5 per cent."





Summary Results


Financial performance

September 2018

September 2017


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Net rental income




Dividend per share




Property valuation and performance

September 2018

March 2018


Investment property




Diluted EPRA NAV per share




Rent roll








Loan to value ratio




Undrawn facilities and cash




Weighted average cost of debt





CEO's statement

The first half of this year has been another six months of significant progress as we continue to consolidate our leadership position in UK primary care property. We have grown our portfolio by £110 million, largely reflecting the acquisition of 37 properties for £96 million plus £13 million of completed developments. Overall, our investment property increased 6% to 556 medical centres valued at £1.8 billion and we remain the largest listed owner of primary care properties.

As we announced on 5 October 2018, subsequent to the period end we completed a further three acquisitions at a cost of £50 million, including Stratford Healthcare Centre - a high quality property of scale that provides a wide range of services to the local community.

We have delivered on our plan to achieve an investment grade rating, having been assigned a rating of A- (stable outlook) by Fitch Ratings Limited, a result that underlines the strength of our business model and balance sheet. In July, we leveraged this rating to launch a £300 million unsecured listed bond with a coupon of 3% and a tenor of 10 years, locking into fixed rates and increasing our weighted average maturity of debt to 8 years. Our period end weighted average cost of debt is 3.28%.

Our current LTV is 30%, which we expect to increase as we fund further growth of the portfolio. We are comfortable with our LTV increasing to a level around 40% and so considerable headroom is in place to fund further growth.

As at the half year, we have a strong pipeline of acquisitions (£107 million) and developments (£82 million) currently in legal hands, and we are in discussions with many other schemes beyond this as we continue to see opportunities to refresh the pipeline. In particular, the level of development opportunities is promising and is starting to show the benefits from the investment we have made in strengthening our development team.

Financial highlights
Demonstrating our success in promptly investing the proceeds of the 2017 equity raise to further grow our portfolio, net rental income increased 21% to £46.2 million, while EPRA earnings increased 36% to £31.7 million, or 1.3 pence per share, also reflecting our decision to refinance the legacy secured Aviva debt. IFRS profit before tax was £37.4 million and diluted EPRA net asset value grew to 52.7 pence per share at the period end.

This strong financial performance has enabled us to announce an intended increase of 5% in our dividend from January 2019 to 0.685 pence per share on a quarterly basis.

Market opportunity

Under a new Secretary of State for Health, the NHS is planning the allocation of its additional funding with a renewed focus on illness prevention. This focus leans to investment in primary care, partnership working with community healthcare services and social prescribing. Further detail for NHS capital investment will come with next year's spending review, but with private finance initiatives ("PFI") ruled out by the Chancellor, good value public private partnership options for investment in community healthcare buildings, such as third party development, can play an important role.

Assura maintains an open dialogue with the key stakeholders within the NHS and Government. We continue to demonstrate our excellent track record and ability to deliver state of the art primary care premises within the heart of the community. We remain at the forefront to deliver value for money for the NHS and for the taxpayer as a third party developer ("3PD"). The ability to deliver these developments presents limited development risk for Assura with pre-let arrangements and the opportunity for future rental growth.

We have continued to both source and complete acquisition opportunities during the period utilising our proprietary database. Our extended development pipeline is the strongest it has been for the past five years. Assura's market share remains modest and there are many opportunities for further growth in a highly fragmented and specialist market.


The strength of our balance sheet has been recognised in achieving an investment grade rating of A- and raising £300 million in the listed bond market on an unsecured basis. We retain headroom for further investment with an LTV of 30% and available facilities of £398 million.

We have a strong pipeline of £107 million of targeted acquisitions and £82 million of development opportunities currently in legal hands.

The open market rent review mechanism in our sector provides income growth whilst recent land and construction cost inflation provides the potential for future rental growth.

We believe that Assura will continue to provide stable long-term returns and our confidence is reflected in the proposed increase in quarterly dividend from January 2019.