Altrincham-based healthcare real estate investment trust (REIT) Assura plc said it agreed with Canada’s Northwest Healthcare Properties to acquire its UK private hospital portfolio comprising 14 assets for £500 million in cash and shares.
“Assura believes there is significant opportunity in the structurally-supported private hospital market with strong growth potential and attractive investment characteristics, as outlined at its capital markets event in February,” said the Altrincham fund.
“All three strands of private (PMI, self-pay and NHS-referred) are experiencing growing demand with the private market providing essential capacity to local healthcare infrastructure.
“Assura has the skills to capture these opportunities given its long-term relationships in healthcare, its development and asset enhancement capabilities and focus on social impact and sustainability.
“The acquisition significantly accelerates Assura’s strategy to diversify into new sectors at scale by adding high-quality, fully operational assets in the private market spread across the UK at an attractive price.
“It also brings with it a number of financial benefits including earnings enhancement, long-term, secure and growing income through index-linked reviews and supports a covered and progressive dividend policy.
“As a result of the acquisition, Assura is uniquely positioned in the UK as a diversified healthcare REIT.”
Assura is a constituent of the FTSE 250 and as at March 31, 2024, its portfolio was valued at £2.7 billion.
Assura CEO Jonathan Murphy said: “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.
“The acquired portfolio – with long average lease length of 26 years and index-linked rent reviews – complements our existing assets and will benefit from our sector relationships, development and asset enhancement capabilities as the leading listed UK healthcare property investor and developer.
“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.
“The portfolio’s diversified occupier base, combined with our existing private occupier mix, means we now have relationships with all tier one private healthcare providers. This represents a unique opportunity to participate in the growing demand for private healthcare services to help ease growing NHS waiting lists amidst the ongoing UK healthcare crisis.”
Assura chairman Ed Smith 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.
“We are now better positioned than ever to use our expertise and capital to help support the NHS and the country’s wider healthcare market as together we address the health challenges of the modern day.”
Northwest CEO Craig Mitchell said: “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.”