Assura boosts rental income with £67m of acquisitions

Primary care property investor and developer Assura completed the acquisition of eight medical centres in the third quarter for £67m, lifting its rental income.

In an update for the quarter to 31 December 2018, the company said its cumulative investment for the year came to £175m, through the acquisition of 45 medical centres and completion of two developments, with a combined passing rent roll of £8.5m and a weighted average unexpired lease length of 14.6 years.

The FTSE 250 group said it has continued to replenish the pipeline of acquisition opportunities and developments either on site or in legal hands, which currently stand at £86m and £84m respectively.

It now owns 553 medical centres, with a total annualised rent roll of £99.8m versus £97m at 30 September 2018.

The company said it disposed of 11 assets that do not meet its investment criteria, having acquired them as part of recent portfolio acquisitions, generating gross proceeds of £6m.

Assura said primary care remains at the core of government health policy, with investment in this area designed to reduce pressure on other NHS services.

Chief executive officer Jonathan Murphy said: "We are pleased to provide another positive trading update on our business, with £67m of additions to the portfolio in the last three months helping grow our rent roll to £99.8m. Meanwhile we continue to replenish our pipeline of acquisitions and developments which currently stands at £170m.

"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."

At 1000 GMT, the shares were up 2.1% to 55.75p.

Liberum, which rates the stock at 'buy', said the update confirms a continued high level of acquisition spend, consistent with the broker's full-year forecasts.

"We would expect rental growth to have remained steady on H1. A continued improvement in new development approvals should nevertheless support a gradual increase in growth over time. Positively, Assura also made some disposals through Q3, utilising strong market demand to enhance the quality of its portfolio.

"Assura offers high single-digit return potential, with low relative risk. We believe the share price weakness, -12% over the past twelve months, has been undeserved. The shares trade on a CY19E P/NAV of 1.01x, with a 5.1% dividend yield growing at circa 5% per annum."