For investors looking for steady income and relatively low risk, Primary Health Properties (PHP) is hard to beat. Results for the 2017 calendar year showed the dividend rising for the 21st consecutive year, while 90 per cent of all rental income comes from the Treasury.
The need for purpose built primary health centres is as acute as ever, with around half of the GP surgeries in England and Wales regarded as unsuitable for development as health centres offering a far wider range of services. Creating more modern centres would also save money and relieve pressure on A&E departments.
Rental income grew by 8 per cent to £72.5m, boosted by acquisitions, but rental growth is still held back by the lack of new construction. These new-builds are used by the district valuer to assess how rising construction costs can justify higher rents. So, open market rents, which account for three-quarters of all reviews, grew by 1.3 per cent or just 0.3 per cent including reviews, resulting in no uplift. Inflation-linked rents were up 2.3 per cent, and 5 per cent on fixed uplift reviews.
Analysts at Peel Hunt are forecasting adjusted net asset value at the December 2018 year-end of 105p per share from 101p in 2017.
| PRIMARY HEALTH PROPERTIES (PHP) | ||||
| ORD PRICE: | 115.4p | MARKET VALUE: | £716m | |
| TOUCH: | 115.2-115.6p | 12-MONTH HIGH: | 124p | LOW: 106p |
| DIVIDEND YIELD: | 4.5% | TRADING PROPERTIES: | nil | |
| PREMIUM TO NAV: | 22% | NET DEBT: | 123% | |
| INVESTMENT PROPERTIES: | £1.36bn | |||
| Year to 31 Dec | Net asset value (p)* | Pre-tax profit (£m) | Earnings per share (p)* | Dividend per share (p)** |
| 2013 | 68.5 | 20.2 | 5.7 | 4.75 |
| 2014 | 69.5 | 36.9 | 8.3 | 4.88 |
| 2015 | 77.4 | 56.0 | 12.6 | 5 |
| 2016 | 83.5 | 43.7 | 7.8 | 5.13 |
| 2017 | 94.7 | 91.9 | 15.3 | 5.25 |
| % change | +13 | +110 | +96 | +2 |
| Ex-div: | 11 Jan | |||
| Payment: | 23 Feb | |||
| *Adjusted for four-for-one share consolidation in November 2015 **Dividends paid quarterly, xd and pay dates refer to 1st quarterly dividend for the new financial year. | ||||
