UK healthcare real estate investment and development company Asura has signed an agreement to acquire 14 private hospitals across the UK owned by Canada’s Northwest Healthcare Properties for £500 million, including the London Cancer Centre and Edgbaston Hospital in Birmingham.
The deal comes at a time when the NHS is under huge pressure. Near record waiting listThe NHS crisis has led to more people turning to private healthcare, either paying for treatment themselves or taking out insurance, and the NHS is outsourcing more treatments, including cataract surgery, to private clinics to clear the backlog.
The hospitals are spread across the UK and are let on long-term leases to a number of private healthcare providers, including six Nuffield hospitals, including Woking, Edinburgh, Highgate and the London Cancer Centre, five Circle hospitals, including Huddersfield, Lancaster and Lincoln, two Spire hospitals, one in Cheshire and one in Claremont, and Edgbaston Hospital in Birmingham, run by Practice Plus Group. Planned to reopen in September After renovation.
Asura said it has seen demand grow across all three main streams of private healthcare – insurance, self-pay and NHS referrals. Procedures most in demand include cataract surgery, chemotherapy, diagnostics such as endoscopies and colonoscopies, and orthopaedic procedures such as hip and knee replacements, which are procedures suited to day case units.
“The NHS system remains under significant strain and private providers are helping to ease local pressure on waiting lists,” it said.
NHS waiting lists in England reached around 7.8 million people in September last year. The number of infected people remains at 7.6 million.The number of patients is about 6.38 million, some of whom require multiple surgeries, and about 3.1 million patients are waiting for more than 18 weeks.
In late May, Labour promised to end England’s NHS waiting lists within five years if elected, with Health Secretary Wes Streeting saying the NHS was in danger of becoming “a worse service for poor people” if the wealthy turned to private care.
Ashra pointed to a YouGov survey which found eight in 10 people who used private care in the last year had previously used the NHS, and a Care Quality Commission survey which found 56% had tried using the NHS before choosing private care.
Commenting on the deal, Assura chief executive Jonathan Murphy said: “This now means we have relationships with all the leading private healthcare providers. This represents a unique opportunity to tap into the growing demand for private healthcare services to help ease ever-growing NHS waiting lists amid the ongoing UK healthcare crisis.”
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Oli Creasy, property analyst at Quilter Cheviot, said: “This transaction is truly transformative for Ashura’s portfolio which has historically been dominated by NHS run general practices which have tended to enjoy lower rental growth. The hospitals have long remaining leases of 26 years and index linked rental growth which should result in higher rental growth for the portfolio over the coming years.”
Assura’s current portfolio is worth £2.6 billion and the deal will increase its size by nearly 20%. The transaction will be primarily debt-financed, but Assura plans to dispose of parts of its portfolio to repay some of its debt.
To fund the deal, the company will issue £100 million of shares to North West, refinance £266 million of debt, draw down £80 million on its revolving credit facility and use £54 million of cash.
