UK healthcare property investor and developer Assura has purchased 14 fully operational hospitals from Northwest Healthcare Properties for £500 mln (€581 mln).
To finance the acquisition, Assura will issue new shares worth £100 mln (€116 mln), take on £266 mln (€309 mln) in debt, and utilize existing cash reserves and credit facilities for the remaining £134 mln (€156 mln).
Key financial metrics for the portfolio include a WAULT of 26 years, an annual rental income of £29.4 mln (€34.1 mln), a yield on cost of 5.9%, and a day one rent cover of 2.3 times.
The geographical distribution sees 64% of rental income derived from London properties. The portfolio boasts an estimated rental value of £30.2 mln (€35.1 mln), representing a 3% premium over current rent. Rent reviews are linked to inflation indices (60% RPI, 40% CPI) with caps and collars. All properties operate under fully repairing and insuring (FRI) leases, minimizing operational overheads for Assura.
The tenant base is primarily composed of leading private healthcare providers such as Nuffield Health, Circle, and Spire. Notably, 92% of these tenants hold 'Good' or 'Outstanding' ratings from the Care Quality Commission.
Jonathan Murphy, Assura CEO commented: ‘The acquisition of Northwest’s high quality UK private hospital portfolio accelerates the delivery of our broader healthcare strategy, securing increased exposure to the structurally supported private healthcare market as we continue to diversify our offering in line with UK healthcare demands. Expected to be earnings accretive in the first full year, the transaction offers attractive financial benefits including sustainable long-term top line growth to underpin a covered and progressive dividend policy. While the strength of our balance sheet has supported refinancing at an attractive rate, we intend to reduce our leverage in the next 18-24 months via a targeted disposal programme.’
Ed Smith CBE, Assura chairman, said: ‘The UK healthcare crisis is getting more severe with each year, a point well recognised by the incoming Labour Government. This worsening crisis is driving increased demand for healthcare infrastructure including private health estates, and today’s acquisition positions us as the clear leader in this sector of the market.’
Craig Mitchell, Northwest CEO added: ‘These high-quality assets represent significant future growth potential buoyed by favourable healthcare market dynamics in the UK and Assura’s sector-leading position, long-term relationships and expertise in asset management, development and enhancement. Our conviction in Assura and their strategy is evidenced by Northwest taking an equity stake in Assura as part of this transaction, allowing us to benefit from their future success.’
The acquisition is expected to accelerate Assura's diversification efforts into new sectors and generate substantial financial returns.
Assura were advised by Barclays Bank PLC, CMS, and Addleshaw Goddard.
