Assura's JSE Listing: A Contrarian Bet on UK Healthcare
Assura, a UK diversified healthcare REIT has announced a secondary listing at Johannesburg Stock exchange(JSE). The company based based in Altrincham, is reportedly caring for more than 600 healthcare buildings, from which over 6 million patients are served.
Real Estate Investment Trusts (REITs) are companies that own, operate, or finance income-generating real estate properties. They offer investors a way to invest in real estate without directly owning properties themselves. REITs typically invest in properties like office buildings, shopping malls, apartments, hotels, data centers, and warehouses.
Assura's decision to list on the JSE is a curious one. This is because the JSE is seeing a record number of delisting, and South African healthcare is not at its most attractive as an investment sector at the moment, with National Health Insurance (NHI) on the way. Healthcare stocks have not been performing very well on the JSE.
However, Assura’s approach is somewhat different. Rather than investing directly in South Africa, the company is selling shares to South African investors, giving them exposure to UK healthcare real estate. The goal is to expand Assura’s investor base by attracting new South African investors, providing a local platform for easy trading of Assura shares, improving liquidity, and positioning the company for future growth through a more diversified shareholder base.
This is still somewhat puzzling, as the UK healthcare system differs significantly from the US system (where investment returns have been strong). Historically, the UK healthcare sector has not been a good investment for South Africans, with investments in UK healthcare failing to yield significant returns.
In March 2018, Netcare announced its decision to exit the United Kingdom (UK) market by disposing of its interests in General Healthcare Group (GHG). Netcare's CEO was quoted as saying, 'The UK healthcare market has changed fundamentally since Netcare acquired GHG in 2006, primarily due to the global financial crisis and the recession that followed. This has substantially eroded demand for private medical insurance in the UK. This decline was partially offset by the increasing number of NHS patients treated in the private sector at lower tariffs. However, since 2017, NHS demand management interventions to reduce elective surgeries have impacted all providers.
In 2023, Life Healthcare agreed to sell Alliance Medical for about 21 billion dollars. This was less than seven years after they acquired Alliance Medical Group in 2016.
Mediclinic supported the takeover of Spire Healthcare Group PLC by clinical practices operator Ramsay Health Care Ltd. They owned 29.7% interest in Spire Healthcare Group plc, a leading private healthcare group based in the United Kingdom and listed on the London Stock Exchange.
In essence, all the major South African groups went to the UK around the 2010s, lost money, and exited the market.
South Africa's most prominent REIT is Growthpoint Healthcare REIT. It was launched in 2018 as the country's first unlisted REIT dedicated to healthcare real estate. This REIT primarily invests in properties like hospitals, clinics, and medical offices.
Back to Assura.
The company’s first medical property investments consisted of 19 primary care buildings across the UK. In subsequent years, key centres were opened across the country, including the Waters Green Medical Centre in Macclesfield and the Eagle Bridge Health and Wellbeing Centre in Cheshire, according to media reports.
The company’s buildings support the trend of moving a greater range of services from hospitals to community settings. Recent areas of strategic expansion have included diagnostic treatment centres for NHS Trusts (the NHS is the UK’s publicly funded healthcare system), specialist treatment centres for private providers such as Ramsay Healthcare and Genesis CancerCare, and its first properties in Ireland.
Some key developments related to the company include:
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