Care home landlord Public Service Properties (
Southern Cross wasn't one of PSPI's tenants, but its collapse has affected sentiment towards the sector and illustrates its problems. Care home operators' fee income isn't rising as fast as they once expected, given the favourable demographics - pressure on local-authority budgets is causing delays in the referral process. Accordingly, rent increases from the likes of PSPI have squeezed their profits.
PSPI only has one UK tenant, European Care (EC), which is the sixth largest market operator. Ralph Beney at RP&C, the asset management company that provides administrative services to PSPI, stresses that EC is on a firmer footing than Southern Cross because it still owns two thirds of its care homes. But EC's occupancy did fall three points to 85 per cent over the period.
|PUBLIC SERVICE PROPERTIES INVESTMENTS (PSPI)|
|ORD PRICE:||65p||MARKET VALUE:||£ 67m|
|TOUCH:||63-67p||12M HIGH / LOW||88p||60p|
|DIVIDEND YIELD:||10.8%||DEV PROPERTIES:||NIL|
|DISCOUNT TO NAV:||45%|
|INVEST PROPERTIES:||£277m||NET DEBT:||114%|
|Half-year to 30 Jun||Net asset value (p)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 12 Oct
Payment: 29 Nov
PSPI has kept the dividend frozen, but recent market falls have pushed the yield into the double digits. Even if the sector has its fair share of economic problems, that's an attractively solid income stream. Buy.
Last IC View: Buy, 77p, 6 April 2011