After becoming the first real estate investment trust (Reit) to successfully complete a retail bond issue earlier this year, Primary Health Properties (PHP) set about spending its additional liquidity. The healthcare real estate manager spent £3.9m on buying a fully let medical centre in Luton in July and has now agreed terms on further properties worth a total of £49.2m. Management has gone on a buying spree in order to capitalise on healthcare provision changes set out in the UK government's recent NHS bill.
What has become clearer since PHP's last results is that the administration of rented property will be handled centrally through a National Commissioning Board, although the precise relationship with regional NHS trusts is yet to be determined. What has been avoided is a fragmentation of the property management system, which had been feared with the abolition of primary care trusts (PCTs) and would have caused administrative problems for PHP's rent roll; this was up 2.8 per cent to £33.2m on an annualised basis.
However, although operating profit before net valuation gains on the portfolio rose 6.5 per cent to £13.4m, higher finance charges dented the bottom line and prompted broker Peel Hunt to nudge down adjusted NAV forecasts to 315p.
PRIMARY HEALTH PROPERTIES (PHP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 336p | MARKET VALUE: | £251m | |
| TOUCH: | 335-337p | 12-MONTH HIGH | 350p | LOW: 294p |
| DIVIDEND YIELD: | 5.4% | TRADING STOCK: | nil | |
| PREMIUM TO NAV: | 10.7% | |||
| INVEST PROPERTIES: | £539m | NET DEBT: | 160% | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 318 | 12.0 | 18.3 | 9.00 |
| 2012 | 317 | 4.2 | 5.9 | 9.25 |
| % change | -1 | -65 | -68 | +3 |
Ex-div: 26 Sep Payment: 26 Oct | ||||
