Assura, a healthcare real estate investment trust worth £3 billion, is looking to capitalize on the downturn, according to its CEO.
According to The Standard, the chief executive officer of a £3 billion healthcare property trust believes that a downturn in the property market might help London make up for the lost time in investing in NHS infrastructure.
According to Jonathan Murphy of Assura, the city of London has “the worst healthcare estates of anywhere in the country,” partly because of a method for evaluating land valuations agreed upon by the industry and the NHS. This method is more effective in regions where land is valued less highly.
This problem with the ‘Cost Plus’ concept is the root reason. London has been severely underinvested and will eventually need to play catch-up. Ironically, a recession gives us a window of opportunity to do just that.
While the National Health Service in London is “eager to have” the custom medical facilities his firm designs and builds, the city’s norm is for smaller constructions and more retrofitting to adapt older buildings. If land prices were reduced, better construction projects might be possible. During a downturn, “those prices could come down a little bit,” he said.
Assura’s specialty is community healthcare facilities, such as primary care clinics and general practitioners’ offices.
The FTSE 250 firm’s portfolio includes over 600 buildings worth about £3 billion, including 78 in London for nearly £400 million. The Henderson Hospital treated shell-shocked troops during World War II and was renovated into the present-day Benhill and Belmont surgery in Sutton.
This is the type of project that has the potential to provide Londoners access to the same high-quality diagnostics and outpatient care that the rest of the country enjoys.
Murphy emphasized that the NHS is kept apprised of project costs “on an open-book basis” thanks to the developers’ transparency.
No one ever constructs anything on a whim. It’s not like the home builders, who first construct a house and then look for someone to live in it. Nothing is started unless the NHS has approved it, and even then, no spade is touched.
A drop in London’s real estate prices might create new business opportunities. “It will be determined by funding from the NHS and our capacity to locate suitable venues at reasonable costs.”
Assura’s net rental revenue increased by 15% to £70 million in the six months ending September 30, despite a 55% decline in interim profit before the tax due to the wider drop in property values.
