First Read: Derwent London "Moving in a new direction?" (Sell) Gauge

Research evidence excerpt

First Read: Derwent London "Moving in a new direction?" (Sell) Gauge

45 110.46

During Jonathan Murphy’s tenure as CEO, Assura delivered consistent portfolio and

Zachary Gauge

earnings growth, scaling assets from ~£1.7bn to >£3.0bn while maintaining a Analyst

progressive dividend profile. Over time, however, this expansion was accompanied by a zachary.gauge@ubs.com

gradual broadening of the investment strategy beyond core, government-backed +44-20-7901 5534

primary care assets. The move into private hospitals and increased use of capital

Charles Boissier, CFA

recycling structures introduced greater diversity in the income stream, alongside higher Analyst

leverage and a more active operating model. In parallel, development exposure became charles.boissier@ubs.com

more sensitive to execution risk as construction cost inflation constrained the UK +44-20-7568 4415

pipeline. While these initiatives were aimed at supporting growth and enhancing

Nadir Rahman

returns, they may have increased complexity relative to PHP’s more focused primary care Analyst

model. We note Assura’s relative underperformance versus its closest peer in the period nadir.rahman@ubs.com

prior to the emergence of takeover interest. +44-20-7567 1750

Valuation: Derwent trades at a spot estimate 44% discount to spot NTA.

Our model is economic profit based and points to a 52% discount to NTA t+1.

Highlights (£m) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E

Net rental income 185 190 190 185 174 174 178 197

EBITDA (UBS) 151 157 156 153 142 143 147 165

EPS (UBS) (p) 101.78 106.13 98.35 94.39 106.59 107.45 110.11 129.11

DPS (net) (p) 79.00 80.00 81.00 82.26 85.03 86.41 86.79 93.60

Book value per share (p) 3,139.85 3,160.27 3,226.59 3,343.49 3,528.71 3,678.43 3,893.45 4,044.69