Primary-care landlord Assura (AGR) has reset its dividend at 0.45p a quarter - nearly 50 per cent higher than the previous rate and implying a forward dividend yield of 4.7 per cent. Crucially, the payout is comfortably covered by underlying earnings, which totalled 1p per share in the half-year period. In keeping with Assura's new tax status as a real-estate investment trust (Reit), the dividend will now grow with the company's rent-roll, promises chief executive Graham Roberts.
That growth profile depends on acquisitions and market rental growth. The company bought 32 medical centres for £62.9m in September, which will boost underlying profits by about £0.9m a year or 8 per cent. The deal also increased the company's debt load, however, to about 63 per cent of gross assets - high for a Reit. Assura probably cannot make another acquisition like that without raising equity - an option Mr Roberts will consider "if something comes along outside the scale of our balance sheet".
Organic rental growth is modest, meanwhile. RPI-linked leases reviewed in the period delivered astonishingly high rental growth of 6.2 per cent, offsetting a poor negotiating environment for open-market reviews. The process of commissioning new centres - the main driver of rental growth - remains sluggish following April's NHS reorganisation. Assura also made progress selling legacy assets and flogged a PFI infrastructure investment for £22.4m; double book value.
Broker Liberum Capital expects full-year adjusted net asset value of 43.4p.
ASSURA (AGR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 38.6p | MARKET VALUE: | £203m | |
| TOUCH: | 38.8-39.3p | 12-MONTHHIGH: | 40p | LOW: 33p |
| DIVIDEND YIELD: | 3.1% | TRADING PROP: | £20.3m | |
| DISCOUNT TO NAV: | 2% | |||
| INVESTMENT PROP: | £642m | NET DEBT: | 207% | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 36.4 | 5.70 | 1.00 | 0.57 |
| 2013 | 39.2 | 12.2 | 2.20 | 0.61 |
| % change | +8 | +114 | +120 | +6 |
Ex-div: * Payment: * *Second quarter dividend paid on 23 October | ||||
