There are around 10,000 doctor surgeries in the UK, and most aren't suitable for expanding into a modern medical centre offering a range of facilities. So with just 292 modern centres under its belt, Primary Health Properties (PHP) has huge room for expansion. It also has one of the safest tenants, with over 90 per cent of rental income paid by the UK Treasury.
"We are influenced by demographics, not economics," pointed out chief executive Harry Hyman. Irrespective of short-term economic trends, people are living longer and need modern medical centres that will also serve to relieve pressure on hospitals. Net rental income rose by 5.2 per cent in the first half to £32.2m, thanks mainly to acquisitions, while the average annualised uplift of rent reviews completed remained modest at 1 per cent.
The business model has also been launched successfully in the Republic of Ireland, and contracts were exchanged on its first healthcare centre acquisition for €6.7m (£5.6m). PHP is now looking to spend around €150m in Ireland over the next two years. Finances were boosted by a £150m equity issue, which helped reduce the loan-to-value ratio from 62.7 per cent to 53 per cent. Headline profits were lower because of a lower valuation uplift on the portfolio.
Analysts at Peel Hunt are forecasting adjusted net asset value of of 92p at the December 2016 year-end (from 88p a year before).
| PRIMARY HEALTH PROPERTIES (PHP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 109.75p | MARKET VALUE: | £655m | |
| TOUCH: | 109.5-110.25p | 12-MONTH HIGH: | 113p | LOW: 98p |
| DIVIDEND YIELD: | 4.6% | DEVELOPMENT PROP: | £12.2m | |
| PREMIUM TO NAV: | 33% | |||
| INVESTMENT PROP: | £1.17bn | NET DEBT: | 128% | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p*) |
|---|---|---|---|---|
| 2015 | 75.0 | 32.4 | 7.3 | 2.5 |
| 2016 | 82.5 | 25.4 | 4.9 | 2.56 |
| % change | +10 | -22 | -33 | +3 |
Ex-div:- Payment:- *Dividends paid quarterly in February and May. Next quarterly dividend of 1.28125p will be paid on 26 Aug (ex-div on 14 Jul) | ||||
