FINANCE: Assura Group has bought 28 medical centres in a £107m cash, share and debt deal.
The UK REIT and primary care property investor and developer bought the assets from Ray Seymour and Alistair Blacklaws, the founders of MP Realty Holdings Group.
The medical centres have on average a lot size of £3.9m, an unexpired lease term of 15 years and are less than 10 years old.
Assura said the acquisition is immediately earnings accretive and boosts its medical centre portfolio to 230 properties with a contracted passing rent of £46.3m.
The acquisition was completed through the purchase of the entire issued share capital of MP Realty Holdings, a new company into which the acquired portfolio has been transferred.
The consideration for the transaction is £10m in cash and 44,264,196 new ordinary shares in Assura Group, 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 42.75p per share, the shares issued are valued at £18.9m.
Assura is assuming net debt of £77.7m, taking the gross consideration to £107m after provisional costs.
Following rent reviews the portfolio will produce annual rents of circa £6.2m, representing a 5.8% yield for the deal.
The portfolio is reversionary with an ERV of £6.6m.
The current passing rent of £6m adds 15% to Assura’s rent roll. Interest costs on the long-term debt assumed amounts to £4.2m pa and annual direct property costs are anticipated to be approximately £200,000. The incremental annual overhead for managing the portfolio is estimated to be £100,000.
The debt assumed with the acquisition has an average fixed interest rate of 5.5% and an average maturity of 13.5 years.
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%).
The new ordinary shares to be issued by Assura as part of the consideration represent approximately 8.4% of the existing issued share capital. They are expected to be admitted today.
Assura chief executive Graham Roberts 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.”
bridget.o’connell@estatesgazette.com
