Assura shareholders resist private equity as valuations and rents rise

Assura the NHS landlord at the centre of a lengthy bidding war has reported strong annual results that strengthen shareholder resolve to resist a buyout by private equity. The FTSE 250 company owns 603 doctors surgeries medical centres and hospitals throughout the United Kingdom and has found itself weighing a cash offer from American firm KKR against a proposed merger with Primary Health Properties another listed healthcare landlord.

Shareholders are overwhelmingly in favour of merging and keeping the business listed pointing to expectations of further rises in rents property valuations profits and dividends driven by increasing demand for healthcare facilities in an ageing population. The Assura board has now switched its recommendation to the PHP merger marking a shift away from the KKR bid as stakeholders rally around the belief that they will benefit from the company’s longterm growth potential rather than exit the venture at what many describe as the bottom of the property cycle.

The latest financials provide compelling evidence for this stance. At the end of March the valuation of Assura’s portfolio climbed to £31 billion up significantly from £27 billion the previous year. This improvement is attributed not only to new acquisitions and developments but also a likeforlike portfolio rebound of £58 million breaking a twoyear dip in values.

Net rental income rose by 17 percent to £1671 million over the twelve months to March compared with £1433 million the previous financial year. This is due in part to expanding the portfolio but also results from effective rent reviews which delivered an average increase of 32 percent on renewed leases. The surge in rental income alongside increased asset values allowed Assura to report an annual pre tax profit of £166 million a sharp turnaround from the previous years loss of £287 million caused by earlier property writedowns.

Dividend growth remains steady with 334p per share paid over the year representing a 31 percent increase and marking the eleventh consecutive year of hiking shareholder returns. Chief executive Jonathan Murphy commented that the group’s robust results reflect both the quality of Assura’s assets and its consistent track record of growth although he declined to elaborate further due to ongoing takeover regulations.

Shareholders view these results as vindication for their preference to merge with PHP and continue reaping the rewards of a resilient and growing healthcare real estate market rather than sell out prematurely. The merger option is increasingly seen not only as a vote for steady income but also for the future strategic position of the listed group within the UK’s essential healthcare infrastructure.

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