Primary Health Properties - Winning returns, lowest costs
Primary Health Properties PLC (LON:PHP) recently announced its full-year results to December 2019. These were in line with our forecast and confirmed a strong year for the company. Earnings per share as measured by the adjusted EPRA EPS (see footnotes to the table) grew by 5.8%, and the dividend (full-year total) was increased to 5.6p.
Following the transformational merger with MedicX (another primary healthcare real estate investment trust, or REIT) in March 2019, the company has fully delivered on the key merger objectives – integrating the companies, a reduction of £4mln in the cost base, and financing cost reduced by half a percentage point to 3.5%. The success of the merger was a significant contributor to the strong share performance in the year, in our view.
Drivers for 2020
With the merger objectives largely complete, we believe that the focus for 2020 returns to the more organic value drivers. The company has six new developments on site for completion in 2020, and a pipeline of property acquisition targets. Furthermore, we expect to see more asset management projects to increase the value of the existing portfolio. In addition, we believe that there will be a continuation of the improved trend in rental uplifts in the UK market. We provide an overview of these drivers on p2.
Quick facts: Primary Health Properties PLC
Price: 153.8 GBX
Market Cap: £1.87 billion
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