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Primary Health eyes growth opportunities in UK and Irish healthcare sectors

What PHP does

Primary Health Properties PLC (LON:PHP) invests solely in the freehold or long leasehold of modern purpose-built healthcare facilities in the UK and the Republic of Ireland.

The group holds the properties for long-term investment and leases them to general practitioners (GPs), government healthcare bodies, pharmacies and other associated healthcare agencies.

The company floated on AIM in 1996 before graduating to the full market in 1996, and in 2018 it reached a significant milestone, joining the FTSE 250 index.

As of June 2020, PHP’s portfolio to 490 properties was worth north of £2.5bn as it drummed up an expanded £140mln from investors to take advantage of an expanded pipeline of investment opportunities now seen at £128mln.


How it is doing

Primary Health reported a strong increase in earnings over 2020 as the coronavirus (COVID-19) pandemic increased demand for its assets as healthcare providers came under strain.

For the year to December 31, the FTSE 250 firm reported adjusted earnings of £73.1mln, a 22.4% increase on the prior year, while its net rental income jumped 13.4% to £131.2mln.

PHP also noted that the valuation of its property portfolio had increased by 2% to £2.58bn, while occupancy rates inched up slightly to 99.6% from 99.5% in 2019.

As a result of the strong performance, the firm reported total quarterly dividends for the year of 5.9p per share, a 5.4% increase on 2019.


What the boss says: Harry Hyman, chief executive 

“We have continued to support the NHS in the UK, HSE in Ireland and our GP occupiers throughout the COVID-19 pandemic which has highlighted the demands on health systems around the world. Many of our primary care facilities and occupiers are now in the front-line of delivering Covid-19 vaccines.

“We continue to see demand for extra space to help enable the redirection of activities out of hospitals.  The need for modern, integrated, local primary healthcare facilities is becoming ever more pressing in order to relieve the pressures being placed on hospitals and A&E departments”.

“In early 2021, we successfully completed the internalisation of the group’s management structure which will immediately deliver material financial and operational benefits.

What the broker says 

Primary Health was upgraded to ‘buy’ from ‘hold’ by broker Peel Hunt after the trust brought its management in-house.

The internalisation, which was completed via the acquisition of management company Nexus for £33.1mln, “further enhances [PHP’s] position as the most efficient UK REIT, delivers an immediate dividend increase and further improves management alignment”, analysts said in the note to clients.

As well as increasing their combined stake in the REIT to roughly £35mln, the deal also “secures the top management team” and “better aligns them with shareholders”, who resoundingly voted it through.

What the analyst says:

Click here to Read Ed Stacey’s research update on Primary Health Properties

Inflexion points

  • Rental growth from the portfolio
  • Acquisitions of more healthcare properties
  • Asset management expansion opportunities



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