Assura hikes dividend as NHS rent roll rises, shares bounce

Primary care property developer Assura said it made good progress in the third quarter and hiked the quarterly dividend 9% as it looked forward optimistically at NHS plans to build more doctors' surgeries.

The FTSE 250-listed group acquired 22 medical centres for a gross £48.8m in the in the third quarter ending 31 December, with these properties having a rent roll of £2.5m and a weighted average unexpired lease length of 13.8 years.

Assura said it had a pipeline of acquisitions and developments currently in solicitors' hands worth approximately £103m, for which it had undrawn facilities of £130m.

By the period end, the total annualised rent roll increased to £72.7m from its 385 properties, up from £70.1m from 363 centres at the end of September.

The quarterly dividend was lifted 9% for the January 2017 payment to 0.6p per share.

Interim chief executive Jonathan Murphy said: "The long-term solution to the challenges facing the NHS is widely agreed to include more healthcare being provided in the primary care sector, by GPs. This in turn will require investment in GP premises."

Under its Estates and Technology Transformation Fund, the NHS has identified a need to invest in more than 200 new build primary care schemes.

"We are pleased that the government has shown its support for this by the ETTF. Firm timetables and funding to turn these plans into reality are now essential if the benefits to the NHS are to be achieved within the five-year timeframe of the GP Forward View."

Assura shares bounced off Tuesday's six-month low, amid widespread anxiety about the NHS's finances, rising 2.5% to 53.3p.

Broker Liberum noted the 84 reviews agreed in the year to date at a weighted average increase of +1.72% was increasing on the +1.6% trajectory at the interim stage and was ahead of its +1.5% March 2017 forecast.

"Assura continues to deliver an attractive combination of inflation linked return enhanced by scale benefit as it consolidates a fragmented low risk industry," analysts wrote, upgrading their rating to 'buy' from 'hold'.

"Given the predictability of the business, we believe the recent share price weakness is unwarranted. The shares offer high visible earnings growth, backed by low risk assets, with a 4.6% dividend yield growing at ~9% p.a."