15 February 2025
If you are covering the news of an unsolicited bid for Assura, the UK Real Estate Investment Trust, please find below a comment from Oli Creasey, head of property research at Quilter Cheviot:
“On Friday evening, Assura confirmed that it has received an unsolicited approach from private equity, we assume to take the company private.
“This would be the latest in a string of REIT takeovers in the UK, where the sector has been trading at a deep discount to the values of the underlying properties for some time, and where the private markets can see value that the public ones don’t.
“There are several notable points. First of all, Assura is a £1.2bn market cap company, with an internal management team. Previously, the companies being taken private have been smaller and externally managed, making it a simpler acquisition (an external management contract can often be terminated relatively easily, whereas Assura’s employees would need to be made redundant if they weren’t being kept on).
“Assuming the acquisition is successful, it raises the question of which REITs are too big for private equity to swallow? Segro is the UK’s largest REIT at just under £10bn market cap, but most of the other large companies are in the £2-4bn range – which is still a step up, but less than before.
“The other notable information is the identities of the would-be buyers: KKR (Kohlberg Kravis Roberts & Co. Partners) and USS (Universities Superannuation Scheme). The latter entered into a joint venture with Assura in mid-2024, and its involvement in the takeover attempt will raise eyebrows – was the joint venture a due diligence exercise for USS, or did it gain a larger appetite for UK healthcare assets following the initial investment? Perhaps USS became frustrated by the pace of the project and this is the response?
“If a bid materialises, Assura’s investors will be left with a tricky decision, depending on the price offered. The company has been struggling to increase the share price, but the 8.6% dividend yield is highly secure and of interest to income-orientated investors who might be loathe to see it go, and find it difficult to replace.”
