Assura Group Limited Acquires 32 medical centres for £62.5 million
Assura Group Limited ("Assura"), the UK REIT(1)and leading primary care property investor and developer is pleased to announce that it has acquired the entire issued share capital of Trinity Medical Properties Limited and Trinity Medical Developments Limited (together "Trinity").
Trinity owns 32 modern high quality medical centres. The portfolio benefits from high standards of both build quality and maintenance, and has a rent roll of £4m with a weighted average unexpired lease term of 16.2 years. It is let to GPs, NHS Bodies and pharmacy operators on industry standard open market rent review terms, which provide an excellent covenant and exposure to future rental growth.
The portfolio has been acquired for a total cost of £62.5m, which, with passing rents of £4m, equates to a rental yield of 6.40% and increases Assura's contracted passing rent by over 10%.
Trinity's audited results for the year to 31 March 2013 showed an annual profit before and after tax of £0.7m and £0.6m respectively. As a qualifying REIT Assura is exempt from tax both on the profits of the Trinity business and on a latent capital gains liability of about £2m.
Assura expects to deliver overhead savings of £0.1m and estimates a reduction in the interest charge arising on consolidation to be £0.1m (2). The resultant pro-forma annualised underlying profit improvement when Trinity is consolidated is therefore expected to be approximately £0.9m.
The overhead savings will be delivered by managing the enlarged portfolio with the existing asset management team at Assura.
The consideration for the transaction is £6.9m in cash for the equity of the acquired businesses, which is after a provision of £1.7m to allow for the potential re-financing costs of the debt. Assura is assuming Trinity's existing debt of £52.1m, other short term creditors of approximately £1.4m and expects to incur transaction costs of £0.4m. Therefore the total cost of the transaction is £62.5m. The provision for potential re-financing costs represents the full costs of re-pricing the debt to current market rates at today's date and provides Assura with the flexibility to re-price or redeem efficiently in the future. The Trinity debt currently has an average maturity of 12.6 years and an average fixed interest rate of 5.6%.
Including the Trinity portfolio, Assura's core portfolio stands at 197 primary care properties with a contracted passing rent of £40.7m.