Join our community of smart investors

Primary Health Properties eyes Irish expansion

The medical centre letting and development group boosted its spending firepower last year
February 12, 2020

The scale benefits of Primary Health Properties’ (PHP) All-Share merger will MedicX last year have been quick to shine through, with the medical centre property group wiping the promised £4m from annual operating costs, while the average cost of debt fell by 50 basis points to 3.5 per cent.

IC TIP: Hold at 162p

The group undertook substantial capital raising, including £100m by issuing new shares and £150m via an unsecured convertible bond. Management plans to use some of that capital to double its exposure to the Irish primary health market, to account for 15 per cent of the portfolio over the next two years.  

Rent reviews secured an uplift of 1.9 per cent on an annualised basis, which will add £1.6m in income. Open market reviews resulted in a 1.1 per cent annual increase in rent, including 52 properties where no uplift was achieved. Those were typically properties nearing the end of the lease, where management has put in refurbishment plans in exchange for “one or two year's” rent, said chief investment officer Chris Santer.   

Analysts at Panmure Gordon forecast adjusted net asset value (NAV) of 111p at the December 2020 year-end, rising to 115p in 2021. 

PRIMARY HEALTH PROPERTIES (PHP)   
ORD PRICE:162pMARKET VALUE:£ 1.97bn
TOUCH:162.162.2p12-MONTH HIGH:163pLOW: 115p
DIVIDEND YIELD:3.5%TRADING PROP:Nil
PREMIUM TO NAV:60%  
INVESTMENT PROP:£2.4bnNET DEBT:87%
Year to 31 DecNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)*
20157756.012.65.0
20168443.77.85.13
20179591.915.35.25
201810374.310.55.4
2019101-70.2-6.55.6
% change-2--+4
Ex-div: 09 Jan   
Payment: 21 Feb   
*XD and payment dates refer to 1.475p first-quarter dividend for the new financial year