Assura swings to IFRS loss despite rise in passing rent

Primary care property investor Assura reported a 2% improvement in its passing rent roll in its interim results on Thursday, to £146.9m, with a weighted average unexpired lease term (WAULT) of 11 years.

The FTSE 250 company said its net rental income also rose by 1% to £70.8m, while its total investment property value reached £2.73bn and its net initial yield (NIY) expanded to 5.03%, reflecting a 16-basis point increase.

Assura reported a 4% increase in EPRA earnings, amounting to £50.8m, along with EPRA earnings per share of 1.71p.

However, the company recorded an IFRS loss before tax of £17.8m due to a 2% like-for-like valuation decline, driven by an outward yield shift, resulting in losses per share of 0.6p.

Despite that, Assura raised its quarterly dividend by 5% to 0.82p per share, effective from the July payment.

Assura said it now had a portfolio of 612 high-quality primary care properties serving 6.3 million people across the UK.

The company completed two developments in the period and acquired a property in Ireland.

Additionally, Assura said it had undertaken several asset enhancement capital projects, with rent reviews generating a 7.8% increase in the rent roll reviewed.

Its total contracted rental income now stood at £1.76bn.

According to the board, Assura’s strategic expansion into emerging opportunities, such as private health, NHS trusts, mental health and Ireland, was gaining momentum.

It said those areas had become meaningful contributors to the portfolio and cash flow stream, aligned with the company’s goal of relieving pressure on the healthcare system and offering prospects for future growth.

The firm said it maintained a disciplined investment approach with a pipeline of attractive opportunities, including ten developments on-site and a development pipeline of four schemes.

Additionally, 15 asset enhancement capital projects were projected over the next two years.

Assura described its financial position as robust, with a weighted average interest rate of 2.30% and a weighted average debt maturity of 6.5 years.

The company’s net debt stood at £1.195bn on a wholly unsecured basis, with cash and undrawn facilities of £259m.

“Assura has successfully delivered another period of growth by maximising returns on our existing portfolio and maintaining a disciplined approach to developments and asset enhancement opportunities as we proactively responded to the evolving economic backdrop,” said chief executive officer Jonathan Murphy.

“This approach extended to our portfolio and balance sheet management, as we successfully completed our 100th development project and delivered dependable cash flows while also refinancing our revolving credit facility to lock in flexible financing to drive future growth.

“As we ready for our next phase of growth, we are focused on leveraging our proven track record and market expertise to further expand our efforts in areas of emerging opportunities.”

Murphy said each area responded to a distinct healthcare challenge to provide additional quality capacity for services in a community setting.

“These include developing for private providers, working directly with NHS trusts and mental health services as well as bringing our expertise to the Irish market.

“The need for high-quality healthcare buildings in a community setting is more pronounced than ever, with one-third of the UK’s current GP estate in need of replacement, an ageing population and growing pressures on the health system.

“Our market-leading position and strong balance sheet see us well-placed for long-term future growth.”

At 1117 GMT, shares in Assura were down 2.54% at 45.32p.

Reporting by Josh White for Sharecast.com.