Assura plc (“Assura”), the UK's leading primary care property investor and developer, today publishes a trading update for the third quarter to 31 December 2018.
Value enhancing investment and development activity
Assura has continued to grow during the three-month period, completing the acquisition of eight medical centres at a combined cost of £67 million.
This takes the cumulative investment in the year to £175 million, through the acquisition of 45 medical centres and completion of two developments, with a combined passing rent roll of £8.5 million and a weighted average unexpired lease length of 14.6 years.
We have continued to replenish the pipeline of acquisition opportunities and developments either on site or in legal hands, which currently stand at £86 million and £84 million respectively.
The Company continues to see an improvement in the approval process for developments with work starting on site in Tonbridge, Kent on a new medical centre to create more space and modern facilities to meet the demands of the area's growing population. Work continues to progress well on the four other schemes currently on site, including a new primary care centre to serve 20,000 patients in South Woodham Ferrers, Essex, and we expect work to start early in 2019 on site at Newtown, Birmingham, creating a new building for an 11,000 patient practice.
We have also disposed of 11 assets that do not meet our investment criteria, having acquired them as part of recent portfolio acquisitions. Gross proceeds were £6 million.
Rental income increased to £99.8m
Assura now owns 553 medical centres with a total annualised rent roll of £99.8 million (30 September 2018: £97.0 million).
Secure and growing dividend
In line with our policy to provide a secure, fully covered and growing dividend stream for investors, and as announced on 22 November 2018, the quarterly dividend was increased by 5% for the January 2019 payment to 0.685 pence per share, equivalent to 2.74 pence per share on an annualised basis.
Strong financial position
As at 31 December 2018, Assura's gross borrowings stood at £660 million, with a weighted average cost of debt of 3.28% and a weighted average debt maturity of 7.8 years. Assura, which has been assigned an investment grade rating of A- by Fitch Ratings Ltd, has in place committed undrawn facilities of £300 million to fund the pipeline of acquisitions and developments.
Market update
Primary care remains at the core of government health policy, with investment in this area designed to reduce pressure on other NHS services. This has been repeatedly highlighted by the health secretary and in the NHS's Long Term Plan, announced this month, which puts primary medical and community health services at the heart of plans.
A national 'call for solutions' to a range of challenges for GP premises is due to report this year, which is likely to highlight the ongoing difficulties faced by practices without the space, layout or facilities they need to best serve their patients.
The formal end of PFI and PF2 was announced in November's budget, with the Chancellor committing to the continued use of public-private partnership where it “delivers value for the taxpayer and genuinely transfers risk to the private sector”. The third-party development model, employed by Assura, remains well-placed to help deliver the significant infrastructure investment needed for the NHS and we await more detail of government's next steps in the spending review and NHS capital planning work.
Jonathan Murphy, CEO, commented:
“We are pleased to provide another positive trading update on our business, with £67 million of additions to the portfolio in the last three months helping grow our rent roll to £99.8 million. Meanwhile we continue to replenish our pipeline of acquisitions and developments which currently stands at £170 million.
Our successful growth and the secure nature of our income has enabled us to increase our dividend by 5% to 0.685 pence per quarter, with effect from the January 2019 payment.”