GP landlord Assura (AGR) has bought 28 medical centres from the founders of MP Realty Holdings for £10m in cash and 44.2m newly issued shares at 42.75p a share, or £18.9m. Assura will also assume net debt of £77.7m, making a total consideration of just under £107m. The acquisition is immediately earnings enhancing, prompting analysts at broker Liberum to upgrade estimates for adjusted book value from 45p to 45.3p a share by March 2015.
The medical centres are all under 10 years old and have unexpired lease terms of 15 years. Some rent reviews remain unsettled, but once completed annual rents will total around £6.2m, representing a gross yield of 5.8 per cent. And there is a further £400,000 of reversion potential from vacant expansion space and rental uplifts. Around 90 per cent of the rental income is contracted to GPs or NHS bodies.
The current passing rent of £6m will add 15 per cent to Assura's rent roll, although there will also be interest costs of £4.2m on the debt, which has an average fixed rate of 5.5 per cent and an average maturity of 13.5 years. Fair value adjustments on consolidation should bring this down to 5.2 per cent. Following the acquisition and share issuance, Assura's loan-to-value rate will rise from 62 per cent to 65 per cent.
