?63m acquisition and ?21m development agreement

RNS Number : 2806W

Assura Group Limited

06 November 2014

 



6 November 2014

Assura Group Limited

£63m acquisition and £21m development agreement

Assura Group Limited ("Assura"), the UK REIT and leading primary care property investor and developer, is pleased to announce the acquisition of a portfolio of 11 high quality medical centres for £63.1 million. The acquisition will be completed through the purchase of the entire issued share capital of Metro MRI Limited ("Metro") from Ray Seymour, Alistair Blacklaws and certain of their related parties.

Assura has also agreed in principle, with the vendors of Metro, heads of terms for funding four further medical centres to be developed by them on behalf of Assura, which are expected to have a value on completion of £21 million.  These developments were not included in the pipeline of acquisitions and developments set out in the Company's recent prospectus.

Acquisition of Metro

The Metro portfolio was highlighted in the Company's recent prospectus as a potential acquisition and negotiations have since concluded successfully.  The 11 medical centres  have an average lot size of £5.7 million, an unexpired lease term of 20.3 years and the majority are under five years old.  The centres support the work of approximately 90 GPs servicing the health requirements of around 115,000 patients in England and Wales.

Assura's medical centre portfolio now stands at 247 primary care medical centres with a contracted passing rent of £52.9 million.

Consideration

Assura is acquiring the share capital of Metro for approximately £18.5 million and assuming net debt within Metro of £44.3 million (including adjustment for the fair value of fixed rate loans) and so the gross consideration for the portfolio is estimated as £63.1 million including costs of £0.3 million.  As part of our wider plans to use proceeds from the recent fund raise to reduce net debt, we are actively considering our options regarding the debt assumed with Metro.

The vendors have elected to receive a significant proportion of the total consideration in shares so as to increase their existing Assura shareholding and to utilise the tax benefits afforded to vendors in a transaction with a listed REIT.

The consideration for Metro's share capital is 18,834,148 new ordinary shares in Assura Group Limited, which are being issued subject to a 12 month orderly market agreement in customary form and approximately £9.1 million in cash.  Based on the closing share price on 5 November 2014 of 50 pence per share, the shares issued are valued at £9.4 million.  The final cash consideration is subject to possible adjustment pending finalisation of completion accounts prepared up to the day of acquisition, other post completion adjustments and transaction costs.

Financial effects

The current passing rent of £3.4 million adds 7% to Assura's rent roll;  89% of this income is contracted to GPs or NHS bodies and 74% is contracted on leases subject to open market rent reviews, whilst 26% is subject to fixed uplift or inflation-linked reviews.

The portfolio is reversionary with an Estimated Rental Value of £4.1 million, of which £0.1 million of additional rent is achievable if all rents were brought up to current market levels and a further £0.6 million arises on letting expansion space provided for GP tenants and other community providers.

The debt assumed has an average fixed interest rate of 5.4% and a maturity of 15.1 years.  On consolidation there will be fair value adjustments to reflect current market interest rates for long-term borrowings, and hence these are expected to lower the current interest charge of £2.3 million per annum to £2.0 million per annum.  

Annual direct property costs are anticipated to be approximately £100,000 and the incremental annual overhead for managing the portfolio is estimated at £50,000.

Listing of new shares

The new ordinary shares to be issued by Assura as part of the consideration represent approximately 1.9% 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 6 November 2014.

Heads of terms agreed for four further developments

In addition, the vendors of Metro have agreed, in principle, to transfer to Assura with Metro certain rights and obligations to four further medical centre schemes which it is intended they will develop on Assura's behalf and for which they will receive fees.  Assura will provide funding for these schemes.

All these schemes are NHS approved, are expected to have a value on completion of £21 million and will benefit from leases of 25 or 30 years.  Subject to certain conditions precedent, two of the developments are expected to be on-site within the next six months, with the remaining two expected to commence on site later in 2015.

Graham Roberts, Chief Executive of Assura said:

"Following our successful fund raise last month, we are delighted to add 11 outstanding medical centre investments to the four schemes we announced earlier this week.  In addition we are pleased to continue our association with the vendors, securing a further four new high quality schemes, with exceptional lease lengths, which they will develop on our behalf."  

- Ends -

For more information, please contact:

Assura Group Limited	Tel: [phone]
Graham Roberts Jonathan Murphy Carolyn Jones
Oriel Securities Limited	Tel: [phone]
Mark Young Roger Clarke
Liberum Capital Limited Peter Tracey Jamie Richards	Tel: [phone]
Finsbury	Tel: [phone]
Gordon Simpson

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.

 

END

 

 

ACQFSEFWIFLSEIF