Acquisition of 28 medical centres for ?107 million
13 June 2014
Assura Group Limited
Acquisition of 28 medical centres for £107 million
Introduction
Assura Group Limited ("Assura"), the UK REIT and leading primary care property investor and developer, is pleased to announce that it has acquired 28 high-quality, modern medical centres from Ray Seymour and Alistair Blacklaws, the founders of the MP Realty Holdings Group.
The 28 medical centres have on average a lot size of £3.9 million, an unexpired lease term of 15 years and are under 10 years old. The centres support the work of 230 GPs servicing the health requirements of around 320,000 patients in England and Wales.
The acquisition is immediately earnings accretive1. Assura's medical centre portfolio now stands at 230 primary care medical centres with a contracted passing rent of £46.3 million.
Consideration
The acquisition was completed through the purchase of the entire issued share capital of MP Realty Holdings Limited, a new company into which the acquired portfolio has been transferred.
The consideration for the transaction is £10 million in cash and 44,264,196 new ordinary shares in Assura Group Limited, which are being issued subject to a 12 month orderly market agreement in customary form. Based on the closing share price on 12 June 2014 of 42.75 pence per share the shares issued are valued at £18.9 million. In addition, Assura is assuming net debt of £77.7 million and so the gross consideration is estimated as £107 million after provisional costs. The final cash consideration is subject to possible adjustment pending finalisation of completion accounts prepared up to the day of acquisition.
Rental Income
Rent reviews for certain of the medical centres remain unsettled with expected uplifts of £0.2 million on rent reviews dating back to 2009. On settling these outstanding rent reviews, annual rents will be approximately £6.2 million, which represents a yield on the gross consideration of 5.8%. 90% of this income is contracted to GPs or NHS bodies.
The portfolio is reversionary with an Estimated Rental Value of £6.6 million, of which £0.1 million of additional rent is achievable if all rents were brought up to current market levels and a further £0.3 million would arise on letting expansion space provided for GP tenants.
Financial Impact
The current passing rent of £6 million adds 15% to the rent roll. Interest costs on the long-term debt assumed amounts to £4.2 million per annum and annual direct property costs are anticipated to be approximately £0.2 million. The incremental annual overhead for managing the portfolio is estimated to be £0.1 million.
The debt assumed with the acquisition has an average fixed interest rate of 5.5% and an average maturity of 13.5 years. On consolidation there will be fair value adjustments, primarily to reflect current market interest rates for long-term borrowings, and hence these are expected to lower interest charges and increase underlying profitability by a further £0.1 million per annum. Following the acquisition and the issuance of shares to the vendors the pro-forma loan to value ratio for Assura is 65% (31 March 2014: 62%).
Listing of new shares
The new ordinary shares to be issued by Assura as part of the consideration represent approximately 8.4% of the existing issued share capital. Application has been made to the UK Listing Authority for the new ordinary shares to be admitted to the premium segment of the Official List and to the London Stock Exchange for the new ordinary shares to be admitted to trading on the London Stock Exchange's main market for listed securities. The new ordinary shares are expected to be admitted at 8.00 a.m. on 13 June 2014.
Graham Roberts, Chief Executive of Assura said:
"The acquired portfolio has been carefully constructed and managed over many years and represents a very good fit with our existing strong and growing portfolio. Ray and Alistair's approach to quality of design and construction and ongoing support for their GP occupiers mirrors our own philosophy and we look forward to providing continued support to their occupiers in the future.
We are pleased to have secured this high quality portfolio in such an attractive market sector. The transaction represents further progress in Assura's strategy of building scale, following on from our purchase of 32 medical centres from Trinity in September last year. Both acquisitions benefit from our internally managed model where significant growth in our portfolio requires only marginal increases in overheads."
Ray Seymour, Chairman of MP Realty Holdings Group said:
"We are pleased to have concluded this transaction with Assura, becoming investors in Assura at an exciting time in its evolution and ensuring our GP occupiers will be well looked after."
- Ends -
Note 1: This statement does not constitute a profit forecast
For more information, please contact:
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Assura Group Limited |
Tel: 01925 420660 |
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Graham Roberts Jonathan Murphy Carolyn Jones |
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Oriel Securities Limited |
Tel: 0207 710 7600 |
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Mark Young Roger Clarke |
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Liberum Capital Limited Peter Tracey Jamie Richards |
Tel: 0203 100 2000 |
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RLM Finsbury |
Tel: 0207 251 3801 |
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Gordon Simpson |
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Notes to Editors
Assura Group is a long-term investor in and developer of primary care property. The company, headquartered in Warrington and listed on the London Stock Exchange, works with GPs, health professionals and the NHS to create innovative property solutions in order to facilitate delivery of high quality patient care in the community. At 31 March 2014, Assura Group's property portfolio was valued at £668m.
Further information is available at www.assuragroup.co.uk.
This information is provided by RNS
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