Primary Health Properties Plc's (LSE:PHP, OTC:PHPRF) looks "well positioned" as it continues to deliver attractive organic rental growth, that's according to house broker Shore Capital.
The UK stockbroker, in a note following PHP's interim results, highlighted that the property investment company's 7.5% dividend yield is being underpinned by accelerating rents and faster-than-expected savings from its Assura merger.
"We continue to forecast the company benefiting from earnings accretion in FY26F, further supporting an attractive dividend yield – currently 7.5%," said analyst Andrew Saunders.
"PHP has consistently delivered resilient operating metrics in a healthcare market with strong fundamental demographic characteristics, aided by a supportive political backdrop and the need for greater investment in healthcare infrastructure to assist with the delivery of services in local community settings. The shares continue to present a highly attractive opportunity for investors, offering among the best risk-adjusted, total returns profiles in the sector."
Shore noted that the healthcare property investor delivered a strong first half, with interim earnings per share rising 9% to 3.8p. Rent reviews generated an additional £4 million of income, producing a 3.2% annualised uplift against PHP’s 3% target.
Its interim dividend increased 2.8% to 3.65p per share, supporting Shore’s forecast for a 7.3p full-year distribution. At 97p, the shares trade just below the reported EPRA net tangible asset value of 99p.
PHP has also delivered 92% of the £9 million cost savings targeted from the Assura combination, reducing its EPRA cost ratio from 11.3% to 8.7%.
Attention now turns to debt reduction. Portfolio loan-to-value remained at 57%, although Shore expects disposals and new financing facilities to lower leverage and reduce the weighted cost of debt from 3.8% toward 3.5%.
The company is also advancing plans for a joint venture covering its £700 million private hospital portfolio, retaining a 50% interest and an asset-management role.
