The Warrington-based healthcare developer has outlined a £107m pipeline of targeted acquisitions and a further £82m of development opportunities in legals as it continues to grow its rental income.
In interim results released today, the developer revealed a 21% uplift in rental incomes for the six months to September 2018, hitting £46.2m up from £38.3m year-on-year.
Its investment property portfolio is also now valued at £1.84bn, up from £1.73bn over the same period.
The developer said the results left it “well-positioned” in a market that “is in need of significant investment”, with the company identifying several factors to boost growth; these include underinvestment in primary care by the Government, its scalable operating model, and the need for GPs to “upgrade premises not currently fit for purpose”.
Speaking to Place North West, chief executive Jonathan Murphy said the company still had a “long way to go” to increase its market share to beyond the 6% it currently sits at, targeting “new developments and next-generation services”. In the North West, he said the developer saw “big opportunities in devolution” with Greater Manchester potentially having the capacity to host “innovative and distinctive” healthcare developments; around £22m of the company’s £107m acquisition pipeline is in the North West.
He added the company currently has 99% occupancy rates in its developments and would “continue to be very active in the North West”; projects it has delivered including a high-end medical centre in Heysham and a healthcare hub in Gorton. Additional investment in primary care by the Government, announced this morning, was also welcomed by Murphy.
Assura has added 39 properties to its portfolio in the UK in the last six months, at a combined cost of £108m. Since the end of September, it has also added a further three worth a combined £50m.
The group said its development pipeline was “the strongest it had been for the past five years” but added its market share remained “modest”, meaning there were further growth opportunities in the “highly fragmented and specialist” primary care market.
Assura also said increasing land and construction cost inflation also provided the opportunity for future increases in rents. While profit before tax fell to £37.4 million from £73.4 million over the period, the company said was “primarily attributed to the decreased valuation gain on investment property, offset to some extent by the higher net rental income following additions to the portfolio”.
In July, Assura announced its first sterling-denominated senior unsecured bond with a tenor of 10 years, following a series of meetings with UK fixed income investors which Assura said had demonstrated strong institutional demand. The bond will bear interest at a rate of 3% per year and will be issued by Assura Financing plc and guaranteed by Assura with a number of the group’s subsidiaries.
Fitch Ratings recently assigned Assura an investment grade rating of A-, which is classed as ‘stable outlook,’ and is expected to assign the Bond an investment grade rating of A-, Assura said.