viewPrimary Health Properties PLC

Primary Health Properties now a Top 15 UK REIT following MedicX Fund merger completion


  • FTSE 250-listed firm with £1.5bn valuation
  • £2.3bn portfolio of primary care assets
  • Dividend yield of 4%

Quick facts: Primary Health Properties PLC

Price: 141.4 GBX

Market: LSE
Market Cap: £1.72 billion

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.

In January 2019, PHP increased the size of its portfolio to 484 properties worth £2.3bn through a merger with MedicX Fund.

The merger valued MedicX at £393mln in total with PHP shareholders owning 69% of the enlarged company.


How they do it

While the MedicX merger gave a big boost to the company’s portfolio, PHP has continued to acquire medical centres on a regular basis, expanding in both the United Kingdom and Ireland.

Harry Hyman, PHP’s managing director commented: “Whatever the final outcome and consequences of Brexit for the UK it is unlikely to have a direct impact on the primary health centres we invest in.”

PHP has increased its dividend for 22 years consecutively

The firm hiked its annual dividend by 2.9% to 5.4p, giving a yield of 4% based on the current share price 134p.

PHP said strong demand for healthcare properties was continuing to push asset prices higher, and it played down Brexit uncertainties.

In June, PHP concluded a £150mln convertible issue at a coupon of 2.86%.


What the boss says

"We are delighted to have successfully completed the merger with MedicX bringing together two highly complementary portfolios and teams in the UK and Ireland and the combined business represents a stronger platform for the future," said Harry Hyman, PHP’s managing director.






Inflection points

  • Further refinancing deals similar to £150mln bond issue
  • Rental growh of out of the portfolio
  • Acqusisitns of more healthcare properties
  • Asset management opportunities



Blue Sky

Analysts at Peel Hunt have a 140p price target on PHP shares.

Reiterating a ‘buy’ rating, in a note to clients published following the completion of the all-share merger with MedicX, they said: “The enlarged vehicle now delivers a very durable income proposition underpinned by a Government covenant and sector-leading income efficiency.”

They highlighted three key points, noting that both sets of shareholders benefit from the merger; market rental growth opportunity is growing, having been somewhat muted for a number of years; and further upside is set to come from a combination of liability management and scale economies, as well as growth opportunities in both the UK and Republic of Ireland.

"A well-underpinned yield, forecast growth of over 4% per annum, and prospective PE of 21x means this stock should now be on the radar screen of any investor looking for secure and growing income-led returns.”

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