Jefferies cuts rating on Assura to 'hold'
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Jefferies has trimmed both its rating and price target on Assura, the specialist UK property developer and investor.
Assura
39.44p
17:15 20/06/24
FTSE 250
20,498.72
17:04 20/06/24
FTSE 350
4,553.78
17:04 20/06/24
FTSE All-Share
4,508.44
16:45 20/06/24
Health Care Equipment & Services
11,404.92
17:04 20/06/24
The broker cut its rating to ‘hold’ from ‘buy’, while the price target was reduced to 45p from 52p.
The downgrade follows Assura’s announcement on Tuesday that it had agreed a £250m joint venture with Universities Superannuation Scheme to support investment in essential NHS infrastructure.
The primary care specialist also posted a 3.8% rise in net rental income for the year to March to £143.3m.
In a note published on Wednesday, Jefferies said: "Loan to value is 43% with the new joint venture, but more action is needed to allay the risk of a credit cut.
"Options include an equity injection - shares trade at a 13% discount to net asset value - asset disposals (earnings dilutive by around 300-400bps) and curtail development (Assura is being priced out).
"Our price target is cut to 45p, factoring in the dilutive impacted of [estimated] £200m per annum high yield/low growth asset sales to degear by 30%, but the 7.8% dividend yield risks being uncovered."
As at 1115 BST, shares in the FTSE 250 real estate investment trust were down 3% at 40.96p.