The long length and NHS backing of leases on Assura’s (AGR) portfolio of healthcare centres have afforded the group a low-risk income stream amid a precarious wider property market. The portfolio’s net initial yield reduced further to 4.72 per cent, from 4.74 per cent last year, but the question is, how much further can yields compress? “We are seeing strong competition for the assets in the market and there are new entrants around,” said chief executive Jonathan Murphy.
Given yields tightened to a much lesser extent, the group recorded a lower revaluation gain than in the prior year, which weighed on pre-tax profits. While the portfolio valuation was up 3 per cent, this was driven by acquisitions and developments, both of which are higher-margin activities that management intends to do more of. In addition to the two developments completed during the first half, 14 were on site and there was a further pipeline of 15 schemes, where work is scheduled to start within 12 months.
House broker Panmure Gordon forecasts adjusted net asset value (NAV) of 55p at the March 2020 year-end, rising to 56.8p at the same time in 2021.
| ASSURA (AGR) | ||||
| ORD PRICE: | 72.2p | MARKET VALUE: | £1.74bn | |
| TOUCH: | 72.1-72.3p | 12-MONTH HIGH: | 76p | LOW: 53p |
| DIVIDEND YIELD: | 3.8% | TRADING PROP: | £1.3m | |
| PREMIUM TO NAV: | 35% | |||
| INVESTMENT PROP: | £2.04bn | NET DEBT: | 57% | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)* |
| 2018 | 53.4 | 37.4 | 1.6 | 1.3 |
| 2019 | 53.5 | 36.4 | 1.5 | 1.4 |
| % change | - | -3 | -6 | +8 |
| Ex-div: | * | |||
| Payment: | * | |||
| *Paid quarterly, second interim dividend of 0.685p a share paid on 17 July | ||||
