Latest news with #Assura
Bloomberg
28-05-2025
- Business
- Bloomberg
KKR Is Fighting Private Equity's Battle for the UK Stock Market
KKR & Co.'s recent deal for a struggling UK real estate firm was initially remarkable for landing in the midst of the American tariff turmoil. Now facing a domestic counterbid, this US-led buyout has become an emotive symbol of the London stock market's capitulation to private equity and foreign bids. The odds may be stacked against the English interloper. But the situation has the feeling of an Agincourt moment for the UK market. Assura Plc accepted KKR's £1.6 billion ($2.2 billion) offer in April in a textbook UK public-to-private transaction. The property company's long-term growth potential is plain to see, given it specializes in hospitals and surgeries. The stock had nevertheless traded at a discount to net asset value (NAV), making it vulnerable to predators. That was heightened after management overstretched to buy a hospital portfolio last August and chose to pay partly in shares, making Assura a target for short-selling hedge funds.
Daily Mail
26-05-2025
- Business
- Daily Mail
Are you losing dividends on your property investment trust due to a takeover bid?
Matthew Norris is managing director of real estate securities at Gravis. Time is money — and in the world of real estate investment trust (REIT) takeovers, it's increasingly shareholders who are footing the bill. Charging for time is especially visible in real estate, where every day has value — whether it's a hotel room for a night, an apartment for a year, or a logistics warehouse for a decade. REITs are portfolios of income-generating assets — and when a buyer approaches, particularly at a discount to net asset value, shareholders should not be left unpaid while the deal negotiations drag on. UK REITs ended April trading at a wider than average 27 per cent discount to net asset value. It's a discount that has lasted many months now, and has attracted opportunistic attention, with REITs such as NHS landlord Assura and multi-let industrial estate owner Warehouse REIT becoming active targets for private equity buyers. Owning attractive assets in sought-after locations, these REITs offer resilient and growing income streams — exactly the kind of cash-generative assets that private capital seeks. Assura has grown its dividend by an impressive 7 per cent per annum over the past decade. But as the pace of takeovers accelerates, a fundamental misalignment has emerged — one that disadvantages shareholders and blindly transfers value to private equity buyers. The financial deadzone benefiting bidders The problem lies in the financial dead zone that exists between a board disclosing a possible takeover approach and the publication of a binding offer under the Takeover Code. While deadlines are set to mitigate this risk, they are often extended — sometimes multiple times. This can create an income blackout period — at times stretching into months — during which the REIT continues to collect rent, but the benefit disappears into a blind spot where shareholders see no new income, despite still bearing the business risk. Every day that passes during this period is worth something - the so-called 'tick value' – and, in today's REIT takeovers, it is value that private equity buyers have managed to capture before assuming any economic risk, while existing shareholders go without. Take the proposed takeover of Warehouse REIT as an example. It is now in its third month in the public domain, and while rental income hasn't paused, shareholders have received nothing. On a yield north of 6 per cent, even a single quarter of delay equates to a 1.5 per cent return quietly stockpiled for the buyer who's yet to carry the risk. Delays benefit the buyer In the current wave of private equity offers, the price — typically anchored to a historic reference point — has not been adjusted for the rental income earned during the due diligence period. And because REITs benefit from contractual rental flows, that income is not hypothetical — it is real, visible, and largely guaranteed. What's more, these cash flows aren't static. REITs are not fixed-income vehicles - the best are growth-income businesses. That is precisely why private equity and others are interested in acquiring them, particularly given the current valuation gap. Rent reversion, where market rents exceed in-place rents, is especially strong in accommodation, logistics facilities, urban warehouses, and West End offices, enabling some REITs in those areas to post meaningful increases in dividend payouts. Grainger, the UK's largest listed landlord, recently boosted its interim dividend by an impressive 12 per cen t, for example. In effect, REITs subject to takeovers are growing their income base even as shareholders wait for the formal offer to be made. And here lies the conflict. In a sector offering yields above 5 per cent and embedded income growth — with the Bank of England in rate-cutting mode, potentially lowering future financing costs — it can suit highly leveraged private equity buyers to drag out the deal timeline. Delaying completion defers the moment they must fund the transaction and start incurring financing costs. Those who bear the risk should receive the reward This misalignment demands correction. REIT investors should continue to receive dividends — including for part-period income — while their capital remains exposed, especially given that the prospective acquirer can still walk away before making a firm offer. This reflects a basic principle: those who bear the risk should receive the reward. REIT management teams don't suspend their pay during negotiations. Shareholders shouldn't have their income suspended either. It's time for REIT boards to demand more — and negotiate harder for shareholders. If the buyer wants the income, let them take the risk — and make a firm offer quickly. If not, the income should flow where it belongs: to the shareholders whose capital is still on the line. Unlike recent private equity bids, the proposed public-to-public takeover of Assura by Primary Health Properties honours the next dividend payment — and doesn't net it off against the offer price. As it should be. In real estate, time always has a price. The same should apply during the takeover process.
Times
23-05-2025
- Business
- Times
NHS landlord Assura keeps room to reject private equity takeover
The board of one of the NHS's biggest landlords has retained the option to reject a £1.6 billion offer from private equity in favour of merging with a rival. Assura, which owns hundreds of doctors' surgeries around the UK, said it had 'carefully considered' a merger offer proposed by Primary Health Properties last week and had decided to explore it further. The company had previously accepted a £1.6 billion takeover bid from KKR and Stonepeak, the pair of American private equity firms. However, that offer, despite being all in cash, has not been warmly received by all shareholders. One, who requested anonymity, called it a 'smash and grab raid'. • What would the doctor say about the bids for Assura? The US bidders have tabled a cash offer of 48½p for each Assura share, which values Assura at slightly less than what its buildings were last deemed to be worth. The bidders argue that they are giving shareholders a certain exit 'at a time of high market volatility' and after a tough few years. They also claim that only they can provide the 'access to capital' that Assura needs if it wants to grow its portfolio and that a tie-up with a rival 'may attract scrutiny' from regulators. Critics of their offer, however, argue that by selling out now, shareholders are likely to miss out on the expected rise in healthcare rents and property valuations over the coming years. They also feel that KKR and Stonepeak should be paying a premium for a multibillion-pound portfolio that took two decades to put together. As such, a number of Assura shareholders, including Schroders and Aberdeen Investments, have come out in favour of merging with PHP. Its offer, of 12½p in cash plus 0.3769 new PHP shares, works out to just over 51p for each Assura share. Under that deal, Assura shareholders would own 48 per cent of the enlarged group. Altrincham-based Assura was set up in 2003 and now owns more than 600 healthcare buildings worth £3.2 billion. Primary Health Properties owns 516 surgeries, dental practices and medical centres from Ramsgate up to the Scottish Highlands and across to Cork. Between them, they generated rental income of £333 million last year, close to 85 per cent of which is ultimately underpinned by the UK and Irish governments. PHP had a couple of earlier proposals quickly knocked back by Assura's board. Bjorn Zietsman, a real estate industry analyst at Panmure Liberum, said its latest offer, tabled last Friday, is 'significantly more compelling' than KKR and Stonepeak's. • Improved bid intensifies battle for NHS landlord Assura Assura's board confirmed that it has 'engaged in further discussions' with PHP and 'commenced due diligence' to determine which offer it should back. Its formal recommendation to shareholders remains to vote in favour of the KKR bid when the time comes, although it is now reviewing that position. The vote had been due to be held in early June but it has been postponed while it assesses the merits of a tie-up with PHP. Although shareholders do not have to follow the board's recommendation, their view is important as passive investors, index tracker funds, for example, usually vote however management suggests. KKR and Stonepeak have so far refused to increase their offer despite the emergence of a rival bidder, although they can still choose to do so. However, one Assura investor said: 'This doesn't come down to a penny or two. If they [come back] with 60p, then we'll talk.' Assura shares fell marginally on the day, closing at 49p, while PHP rose by 0.1 per cent at 98¾p.
Spectator
21-05-2025
- Business
- Spectator
It's time to get rid of the Rich List
Here's a takeover tale that captures the zeitgeist. It involves two FTSE 250 companies and some deep-pocketed US investors – and I'll explain it as simply as I can. In essence, how would you feel if your GP surgery fell into the hands of American investors associated with the book title Barbarians at the Gate? The first of the two London-listed companies is Assura, which owns 600 NHS surgeries and diagnostic facilities and has accepted a cash offer of £1.6 billion from a pair of New York investment giants. They are Stone-peak, which holds a huge global portfolio of infrastructure assets, and Kohlberg Kravis Roberts, whose initials KKR may be familiar to older readers as a pioneer of aggressive private–equity dealmaking – most famously the 1989 buyout (chronicled by Bryan Burrough and John Helyar in the Barbarians bestseller) of the food and tobacco group RJR Nabisco. Imbued with Trumpist swagger, investors like these habitually prowl the London market for undervalued targets. The second company, Primary Health Properties, is the only other significant player in Assura's marketplace, as the owner of 516 GP facilities in the UK and Ireland – and has cut in to offer £1.7 billion for Assura in cash and shares. KKR claims PHP's deal will hit competition issues, though the merged company would hold a relatively small proportion of the NHS surgery estate, most of which is owned by the GPs themselves. In an era in which public markets are shrinking and private equity is rampant, largely to the detriment of smaller investors, this is a rare example of a listed company challenging the Goliath of KKR and its ilk.
Times
21-05-2025
- Business
- Times
What would the doctor say about the bids for Assura?
There are myriad ways to take the temperature of the UK stock market. But what better than this: a bid battle for a business whose buildings house GP surgeries? It's the dust-up for Assura, the healthcare-focused real estate investment trust (Reit). On offer? Two different sorts of medicine: a £1.61 billion cash bid from private equity firms KKR and Stonepeak, which would see Assura vanish from the London Stock Exchange; and a cash-and-shares offer from its rival, Primary Health Properties, worth about £1.7 billion, that would create a bigger UK-quoted Reit. The headline prices are only one clue as to which is the better bid. The take-private duo are offering a cash exit at 49.4p a share, including Assura's 0.84p quarterly dividend paid in April.
