BossCast: GP surgeries are a healthy inflation hedge, says Assura boss Murphy

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Health and social care have been in the headlines for some time, and while Europe has very few public companies that offer exposure to the underlying real estate, Assura has quietly been doubling in size and enabling investors to tap into income underwritten by the NHS, albeit via the rents paid by GP surgeries for their buildings.

As the world recovers from Covid-19, the role of primary healthcare is coming under increased scrutiny. As Murphy explains in a flowing, insightful BossCast episode, Assura is ideally placed to support the idea of integrated healthcare as a “specialist real estate investment trust working solely on healthcare premises”.

With over £2,595 million in their portfolio, and more in the pipeline, the company is uniquely placed in the market due to its focus on integrating traditional GP services with pharmacies, physio treatment areas, diagnostics rooms and dialysis centres – all under one roof.

Murphy believes this will lead to “more efficient treatment where you get results faster, from a GP who knows you and your medical history, and at a fraction of the cost to the NHS.”

When it comes to integrating other health units, like optometrists and dentists, into these spaces, Murphy notes that: “You see it a lot in Europe and the US, and the potential for it to emerge here is huge.”

“If there’s one thing we’ve learnt from Covid-19, it’s how absolutely essential it is to have quality healthcare in local communities,” he says, as access to hospitals became increasingly restricted.

The Assura boss says that: “A surprising majority of GP surgeries across the country are in buildings unfit for purpose.” Assura is innovating to meet shifts in demand by integrating diagnostics rooms with video-calling facilities for those who prefer the ease of virtual appointments.

One of Assura’s signature innovations is the ‘surgery of the future’. The concept, which has been well received within the NHS, increases accessibility to community health services by “removing the reception desk and having a digital check-in, outdoor consultation and treatment spaces, as well as installing self-diagnosis pods and other digitised elements.”

Murphy refuses to comment on whether he thinks the company is under priced, but stresses that: “All rents are underwritten and guaranteed by the NHS. Given the government is unlikely to breach payments on health, the income stream is very certain.”

“Whatever innovations we try and make to our health centres, medical professionals need to be at the centre of it,” says Murphy. The company is increasingly looking to work with the NHS and local authorities to develop their surplus land into health centres.

“It’s a cost-plus model; the NHS gives us a discount on the land and we provide our health centres for a lower cost to the communities, which is a real win-win”, notes Murphy.

Murphy also details plans to repurpose high street retail space into healthcare facilities, such as their project with Plymouth City Council to deliver a state-of-the-artmedical centre in the redundant retail space of a shopping centre.

“The development will be an asset to the town and also attract additional footfall to the shopping centre,” Murphy continues. “Models like these have legs, and we’re keen to work with local authorities and other property developers, like Bruntwood, in the future.”

When asked about Assura’s future expansion, Murphy explains: “Development is really important for us, as seen with the surgery of the future, by building new stock you can test new ideas, such as the UK’s first dementia-friendly medical centre.”

Assura has doubled in size over the past five years, and its CFO-turned-CEO puts this expansion down to its “stable, counter-cyclical business model, secure income and track record of growth”.

Over Murphy’s eight years at the helm, he has overseen the business double in size to over £2.5 million and debt decrease by 25 percent whilst retaining a 4 percent dividend yield to investors. Resultantly, Assura attracts investors with a low-risk high-return model, trading at a three percent premium compared with government bonds, with the safety of being underwritten by the NHS.

“We have massively reduced our debt, meaning less risk for equity investors, and this year got our first £300 million sustainable bond… meaning we have access to the deepest capital. We know that less risk, lower costs and less volatility is the right balance for our business.”

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