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Primary Health Properties sees rental income surge in 2019 following MedicX merger

For the 12 months ended 31 December, the healthcare property group reported that net rental incomes had risen 51.4% to £115.7mln

Primary Health Properties PLC - Primary Health Properties sees rental income surge in 2019 following MedicX merger

Primary Health Properties PLC (LON:PHP) shares rose on Wednesday as the mid-cap firm reported a surge in net rental incomes in 2019 following the completion of its merger with healthcare real estate firm MedicX last March.

For the 12 months ended 31 December, the FTSE 250-listed healthcare property group said net rental incomes had risen by 51.4% to £115.7mln, while adjusted EPRA earnings were 62.2% higher at £59.7mln, £15.6mln of which had been contributed by MedicX.

READ: Primary Health Properties continues its expansion with addition of primary care centre in Wales

The total dividend for the year was also 3.7% higher at 5.6p per share.

Looking ahead, PHP’s chairman Steven Owen said government plans to increase NHS spending will “in time lead to increased activity in the building of new facilities and the modernisation of existing primary care premises”, which in turn he said will benefit the company and its stakeholders.

“Following completion of the merger with MedicX the Group is now in a strong position to continue to deliver further dividend growth, fully covered by earnings, together with long term value to shareholders and wider stakeholders and the Board looks forward with confidence to the future”, he added.

Numbers turbo-charged

Nicholas Hyett, equity analyst at Hargreaves Lansdown: “The merger with rival GP surgery owner Medicx has turbo-charged this year’s headline numbers, while stripping out costs should give profits a long-lasting shot in the arm. Increased interest in mega surgeries that combine multiple healthcare services in one location bode well for the group’s tailor-made properties and it looks like primary care will remain a key focus for government spending going forwards.”

He added: “Not much of that is new news though – government medical policy doesn’t change overnight and PHP moved rapidly to achieve planned cost savings. More immediately relevant to investors is the ongoing acceleration in rental growth and fall in loan-to-value - which is at the high end for Real Estate Investment Trusts like PHP.

“Overall we think the business looks in rude health, but the market has recognised that too and demands a hefty premium of those interested in buying the shares.”

In afternoon trade on Wednesday, shares in FTSE 250-listed Primary Health were 0.6% higher at 162.60p.

 -- Adds share price, analyst comment --

Quick facts: Primary Health Properties PLC

Price: 149.2 GBX

Market: LSE
Market Cap: £1.96 billion

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