Assura has said it will slow down acquisitions after profit halved in H1.
The primary health care investor said it had made £141m of additions to its 603-property portfolio over the first half of 2022.
Its rent roll increased by 3% to £139.3m, with a WAULT of 11.5 years, while net rental income rose by 15% to £70m. EPRA earnings per share rose by 13%.
However, a valuation swing meant that profit was down to £30.9m, from £69.3m in September 2021.
Chief executive Jonathan Murphy said: “Of course we have been affected by the market,” adding that the fall caused by revaluation had only been so pronounced because the 2021 lift was so great, a loss of £19m against a £61.1m gain.
But the wider economic picture did mean that Assura was cooling its expansion programme. “We are being very cautious regarding acquisitions and, to an extent, developments.”
Assura’s LTV has risen slightly to 38%, with net debt of just over £1bn. Murphy said most of the company’s debt was long-term fixed at 2.3%, with a weighted term of more than seven years. “And we still have plenty of available cash for opportunities,” he added. Around £350m, in fact.
For the 10 schemes in the development pipeline, the coming year will be “pretty much business as usual,” Murphy said. “We are being a little more selective, but not dramatically.”
Asset enhancement, the most profitable element of the business, will continue at current levels.
However, acquisitions will be sharply curtailed. “This time last year we had north of £50m in the pipeline,” he said. “We currently have just £10m.”
During H1 Assura added 13 properties to its portfolio through straight acquisitions.
Murphy added that he was not worried about other players in the market taking advantage.
“No one else is buying these assets in our absence, it is just the whole market has slowed down.”
That is not strictly true. There are other players in the market, as Murphy acknowledged. Assura has recently sold a portfolio of 61 assets to a competitor for £73m.
“That disposal was to a new entrant, but they bought from us because they don’t have our access,” Murphy said. Assura’s own deals tend to be off-market.
“A little bit of competition is good,” Murphy added. “And it might give us an opportunity to sell some more and recycle our capital.”
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