The majority of their tenants are GPs, which accounts for c.70% of their income. The remaining income is generated 15% from other NHS tenants and 15% from peripheral medical services, like pharmacies. Assura’s income is “NHS backed” as GP’s rents are reimbursed by the NHS. Due to the specific structural needs of medical centres and a lack of supply of suitable buildings to meet these needs, Assura enjoys leases of 21+ years with very low default risk and sticky tenants that would struggle to leave their established customer base (i.e. their patients).
In April 2020, they raised £185m in equity to take advantage of attractive acquisition opportunities. Some of this capital was also deployed to their Asset Enhancement strategy to add extensions and more specific medical infrastructure to property already in their portfolio, for example a dedicated dementia centre. Assura’s relationship with the NHS provides secure income however this also means the NHS is an active participant in rent reviews and rents have to be deemed efficient for tax payers. Therefore, there is limited scope for rental growth, which is a challenge as they must then rely on acquisitions for significant growth.
