Jefferies cuts rating on Assura to 'hold'
Jefferies has trimmed both its rating and price target on Assura, the specialist UK property developer and investor.
Assura
39.72p
17:15 14/06/24
FTSE 250
20,120.36
17:04 14/06/24
FTSE 350
4,482.59
17:05 14/06/24
FTSE All-Share
4,438.37
17:14 14/06/24
Health Care Equipment & Services
11,262.36
17:05 14/06/24
The broker cut its rating to ‘hold’ from ‘buy’, while the price target was reduced to 45p from 52p.
The downgrade follows Assura’s announcement on Tuesday that it had agreed a £250m joint venture with Universities Superannuation Scheme to support investment in essential NHS infrastructure.
The primary care specialist also posted a 3.8% rise in net rental income for the year to March to £143.3m.
In a note published on Wednesday, Jefferies said: "Loan to value is 43% with the new joint venture, but more action is needed to allay the risk of a credit cut.
"Options include an equity injection - shares trade at a 13% discount to net asset value - asset disposals (earnings dilutive by around 300-400bps) and curtail development (Assura is being priced out).
"Our price target is cut to 45p, factoring in the dilutive impacted of [estimated] £200m per annum high yield/low growth asset sales to degear by 30%, but the 7.8% dividend yield risks being uncovered."
As at 1115 BST, shares in the FTSE 250 real estate investment trust were down 3% at 40.96p.