Assura Share Discussion Threads

[cwa1] 22/5/2024 20:10

Thorough overview ☺️

[george stobart] 22/5/2024 17:05

The Rt Hon Keir Starmer loves this country more than anything in his life and will invest billions to upgrade our beloved NHS infrastructure which will boost AGR's rental income

[essentialinvestor] 22/5/2024 16:52

Glg Partners are short both Assura and PHP, their PHP short is larger

[goliard] 22/5/2024 16:47

Unsecured just means that if Assura was unable to pay it would be up to Assura what assets were sold to repay a debt rather than specific assets being taken by the lender and sold off. However, if Assura was unable to pay their debts shareholders would be stuffed anyway so it's not really that helpful.

[alotto] 22/5/2024 16:04

Is it advantageous for Assura to have their debt unsecured?

[alotto] 22/5/2024 10:48

Thanks Stock. I am not an expert, if the worst can happen is a dividend cut I don't think its a big deal, considering the dividend is unusually high with the current price.

[alotto] 22/5/2024 10:31

Besides I don't this debt will be refinanced at 5.5% in 6 years. Nobody knows what rates are going to be, Jefferies bet is as good as anyone else's. Mine is that rates will go down in 6 years from now.

[stockstockham] 22/5/2024 10:29

They question the credit rating and the overall debt level, and whether income will catch up sufficiently for the dividend.

All reasonable. What is odd is how they do this the day after AGR come into £85m from a JV that will also achieve management fee income.

The point about higher build costs hitting scheme viability is as much a bull point for those already in the sector.

[george stobart] 22/5/2024 10:28

Looks like an imaginary excuse to trim TP on leverage grounds.

CFO said yesterday that they are comfortable to sit on an LTV ~43% and that being slightly over the 40% medium term target is just due to a modest decline in the "V" in the denominator due to interest rates over the last fiscal year.

Simply put if BoE cuts sometime over the next 1-2 years the "V" will naturally increase, moving back the the LTV to ~40%.

Rental growth is largely unaffected due to the the contractual nature of the rental stream and its escalators. But if UK inflation was to collapse further and BoE doesn't cut timely this will keep pressuring the V.

[alotto] 22/5/2024 10:12

What does the Jefferies Note say in Layman terms?

[george stobart] 22/5/2024 09:44

Jefferies Note - Wednesday, May 22, 2024

FY24: Not Quite a Clean Bill of Health - PT 45p and cut to Hold

LTV is 43% with the new JV, but more action is needed to allay the risk a credit cut. Options include an equity injection (shares trade at 13% disc to NAV), asset disposals (earnings dilutive by c. 300-400bps) and curtail development (AGR is being priced out). Our PT is cut to 45p factoring in the dilutive impact of £200m (Jef Est) pa high yield/low growth asset sales to degear to 30% but the 7.8% DY risks being uncovered (FY25 1x). The shares are cut to Hold.

Earnings & Dividends: In FY24 net rents were +4% to £143.3m with average reviews +3.9% (FY23: 3.8%) governed by the district valuer, the commercial arm of the Valuation Office Agency which advises the NHS on valuations, rent reviews and rents on new developments. Vacancies are 1% (unch) and the contracted rent roll £150.6m pa, rising to an all up £161m on developments and reviews. Admin was £13.2m with an EPRA Cost Ratio (incl & excl vacancy costs) 13.2% and 11.7% resp. (FY23: 13.5% & 12.3%). EPS was flat at 3.4p (FY23: 3.3p) and +5% DPS 3.26p, below the 10yr CAGR of 7.3%.

Portfolio Performance: Revalued at £2708m on NIY of +30bps to 5.17% after a -4% Lfl w/down (FY23 -6.4%) partly offset by value activity. The NAV was -8% to 49.4p but the spread wide at NIYs 3.8%-8.5% (equiv 3.9%-8.5% so there is thin organic growth) with the valuer's ERV assumptions £100-£750/sqm (FY23: £100-£669/sqm). The new 15yr life JV with USS diversifies funding and will be seeded with seven (no development, long dated, index linked) assets from AGR valued at £107m at an undisclosed discount. The JV will target acquisition-led growth to £250m with AGR retaining a 20% stake with a management fee.

Development Programme: AGR does not disclose target returns and five schemes were completed with a value of £71.8m in a mix of GP surgeries and broader healthcare markets. Three new schemes are underway with two in Ireland and one in Bury St Edmunds, making eight schemes on site with a combined development cost of £91.2m with £42m remaining to spend. Higher construction and financing costs are affecting the pipeline as AGR needs c 30% higher rents to be viable and thus schemes are being postponed.

Financial Position: Net debt is £1.2bn (all unsecured) at a kd of 2.3% (unch, all fixed) and termed 6yrs. Over the next four years, £170m of debt needs refinancing which at 5.5% would impact EPS by -6%. Gearing is, we maintain, too high and risks cut from Fitch A-. The net debt/EBITDA ratio at 9.4x is >9x Fitch’s rating sensitivity, and 4-5x looks more appropriate. The LTV at 45% is elevated after two years of portfolio w/downs and can operate in the range 40-50% but we view <40% as appropriate. The 3% 2028 bond (Ex 1 traded above its issue spread in 2023.

Outlook: CEO Jonathan Murphy: "The long-term partnership aligns with cross-party political support for investment into essential NHS community healthcare buildings.”

[cwa1] 22/5/2024 09:03

Added a few AGR this morning

[spectoacc] 22/5/2024 08:14

Don't have the note, but apparently cut from Buy to Hold, price target from 52p to 45p. Agree the reasoning would be interesting, albeit I personally don't care how Jeffries rate AGR.

To counter it, were a couple of director buys yesterday:

"- Jonathan Murphy has acquired 198,975 Ordinary Shares at 43p

· Jayne Cottam has acquired 58,800 Ordinary Shares at 42.5p"

[cwa1] 22/5/2024 08:10

How far did they downgrade them/do you have any further info on it? Cheers

[spectoacc] 22/5/2024 08:08

D/g by Jeffries, have added.

[riskvsreward] 21/5/2024 15:52

It is always reassuring to have big insider buying! At least you can think they believe in their own business model and their vision and they are somewhat aligned with other stakeholders. This is the case with a few reits like Supr, Php, agr in which I have taken a position. While others like labs, home etc you never see an insider buy (the compulsory management fee participation doesn’t really count and small in labs’ case anyway), which I have avoided, even if it means a possible missed chance.

[cwa1] 21/5/2024 15:28

Director buys:-

[essentialinvestor] 21/5/2024 15:13

Pretty dire recent share price performance in the context of some sector strength?.

[spectoacc] 21/5/2024 12:56

Assuming you're talking to me, albeit I haven't mentioned cash:


"It is intended that the net cash proceeds received (£85 million) will be recycled into Assura's attractive pipeline of acquisition and development opportunities across medical centres and broader healthcare markets."

[justiceforthemany] 21/5/2024 12:53

Have a look at the balance sheet. Your comment on the cash position is incorrect.

[panshanger1] 21/5/2024 11:36

Muted response today but nonetheless have taken some more Now have a reasonable holding

[rik shaw] 21/5/2024 08:12

'2.4% increase in the quarterly dividend to 0.84 pence per share (3.36 pence on an annual basis) with effect from the July 2024 payment
0.84 pence per share is currently planned to be paid on 10 July 2024 with a record date of 7 June 2024.'