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Primary Health Properties (PHP)

Dod101
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Re: Primary Health Properties (PHP)

#478754

Postby Dod101 » February 5th, 2022, 12:57 pm

monabri wrote:
I had a look through the last PHP annual report and it reports NAV figures applicable at the point when the report was compiled...the issue for me (and I stress, "for me") is making sense of what the report was saying as it stated basic NAV, adjusted NAV, diluted NAV... :?: Hence, I'm no wiser.

However, for me, the attraction of investing in PHP might lie in the yield and the dividend growth rate. However, I didn't invest there because, when funds were available, I placed them instead in an Investment Trust (Law Deb) which had a similar (slightly higher) yield and I deemed was unlikely to undergo a Covid dividend cull/cut. At the time, LWDB was "on offer" in HYP P parlance (..it's usually on offer Mon-Fri 0800 to 4:30pm :roll: ).


The last Annual Report was to 31 December 2020 and it showed NAV per share as 101p, basic and diluted. The adjusted NAV was 112.9p
At 30 June 2021, the adjusted NAV per share is shown as 115.4p, none of which is particularly helpful at this time as we await the results to 31 December 2021. Presumably we may expect a further modest increase but it still shows a massive premium to NAV in the current share price. I think the big premium to NAV came about because of PHP's perceived security of its income whereas many property company's were struggling during the pandemic to collect rents. (PHP is still a property company first, just as all REITS are)

Of course although monabri is not saying it was, I think even the most cynical observer would have not have deemed it likely that PHP would 'undergo a Covid dividend cull/cut' and that proved to be the case.

Dod
Last edited by Dod101 on February 5th, 2022, 1:03 pm, edited 2 times in total.

Arborbridge
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Re: Primary Health Properties (PHP)

#478755

Postby Arborbridge » February 5th, 2022, 1:02 pm

ITs and REITs can have P/Es quoted too - usually the average of the companies they have invested in.


Not sure if that's relevant....

Arb.

Dod101
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Re: Primary Health Properties (PHP)

#478756

Postby Dod101 » February 5th, 2022, 1:05 pm

Arborbridge wrote:ITs and REITs can have P/Es quoted too - usually the average of the companies they have invested in.


Not sure if that's relevant....

Arb.


Well they are often different beasts. ITs are invested in a collection of other companies whereas REITs are often simply a property company which conforms to certain requirements to become a REIT. See for instance B Land, Land Securities and PHP to name but three.

Dod

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Re: Primary Health Properties (PHP)

#478758

Postby Arborbridge » February 5th, 2022, 1:07 pm

Dod101 wrote:
Arborbridge wrote:ITs and REITs can have P/Es quoted too - usually the average of the companies they have invested in.


Not sure if that's relevant....

Arb.


Well they are often different beasts. ITs are invested in a collection of other companies whereas REITs are often simply a property company which conforms to certain requirements to become a REIT. See for instance B Land, Land Securities and PHP to name but three.

Dod


Well, it has often been pointed out that the IT part of "REIT" is really a misnomer. But, both types of company or fund, can quote a PE, I believe.

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Re: Primary Health Properties (PHP)

#478762

Postby BullDog » February 5th, 2022, 1:19 pm

FWIW, I looked at the premium to NAV at PHP yesterday. It's not actually as transparent as I have seen in REIT portfolios elsewhere. I landed on a premium to NAV of around 25%-ish. I think paying 125p for 100p of income generating assets is too much in an environment of increasing interest rates. For me it explains with enough certainty why the stock has fallen from a year high of 170p to 138p yesterday. I think there's more to come off the price on this one yet. Then I might buy.

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Re: Primary Health Properties (PHP)

#478772

Postby Dod101 » February 5th, 2022, 2:13 pm

Arborbridge wrote:
Dod101 wrote:
Arborbridge wrote:ITs and REITs can have P/Es quoted too - usually the average of the companies they have invested in.


Not sure if that's relevant....

Arb.


Well they are often different beasts. ITs are invested in a collection of other companies whereas REITs are often simply a property company which conforms to certain requirements to become a REIT. See for instance B Land, Land Securities and PHP to name but three.

Dod


Well, it has often been pointed out that the IT part of "REIT" is really a misnomer. But, both types of company or fund, can quote a PE, I believe.


I agree and see no reason why not. I suppose the idea is that the REIT name has got to be seen as one term.

Dod

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Re: Primary Health Properties (PHP)

#478940

Postby PoorPhil » February 6th, 2022, 1:50 pm

I've been watching PHP too, looking for an attractive entry point. I agree it's not as easy as some REITs to see the premium/discount, and agree it's still looking pricey although the forward dividend yield is now at ~4.7% on the current SP. It's not a risk free investment, and with inflation running at a similar level to the dividend, I think the SP has further to drop before the yield increases to the point it's compensating for the risks.
What dividend yield would you see as representing fair value for the investment risks?

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Re: Primary Health Properties (PHP)

#478945

Postby BullDog » February 6th, 2022, 2:16 pm

PoorPhil wrote:I've been watching PHP too, looking for an attractive entry point. I agree it's not as easy as some REITs to see the premium/discount, and agree it's still looking pricey although the forward dividend yield is now at ~4.7% on the current SP. It's not a risk free investment, and with inflation running at a similar level to the dividend, I think the SP has further to drop before the yield increases to the point it's compensating for the risks.
What dividend yield would you see as representing fair value for the investment risks?

Thanks. I would be pretty interested if at least another 10% comes off the premium to NAV. Given the quality of the income, I might break my rule of never paying a premium to NAV. So, if the NAV stays constant and the premium unwinds to the point where yield is >5% I might be clicking the buy button. But I would have to sell something first. Given I have recently sold out of Unilever, there's no obvious sell candidate in my portfolio. Possibly SDRC would be sold.

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Re: Primary Health Properties (PHP)

#478953

Postby monabri » February 6th, 2022, 2:45 pm

BullDog wrote:
PoorPhil wrote:I've been watching PHP too, looking for an attractive entry point. I agree it's not as easy as some REITs to see the premium/discount, and agree it's still looking pricey although the forward dividend yield is now at ~4.7% on the current SP. It's not a risk free investment, and with inflation running at a similar level to the dividend, I think the SP has further to drop before the yield increases to the point it's compensating for the risks.
What dividend yield would you see as representing fair value for the investment risks?

Thanks. I would be pretty interested if at least another 10% comes off the premium to NAV. Given the quality of the income, I might break my rule of never paying a premium to NAV. So, if the NAV stays constant and the premium unwinds to the point where yield is >5% I might be clicking the buy button. But I would have to sell something first. Given I have recently sold out of Unilever, there's no obvious sell candidate in my portfolio. Possibly SDRC would be sold.



Debt free SDRC with 43% of the shares family owned, 7% owned by Lindsell Train Ltd (we know N.Train's positive views on SDR) and another 5% held by the employee share scheme & Schroders Investment mgt Ltd. Hopefully they will be successful with their JV with BOCOM.

viewtopic.php?p=478499#p478499

Disclosure.."topped up" SDRC last week....but going off topic!.

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Re: Primary Health Properties (PHP)

#478955

Postby BullDog » February 6th, 2022, 2:50 pm

monabri wrote:
BullDog wrote:
PoorPhil wrote:I've been watching PHP too, looking for an attractive entry point. I agree it's not as easy as some REITs to see the premium/discount, and agree it's still looking pricey although the forward dividend yield is now at ~4.7% on the current SP. It's not a risk free investment, and with inflation running at a similar level to the dividend, I think the SP has further to drop before the yield increases to the point it's compensating for the risks.
What dividend yield would you see as representing fair value for the investment risks?

Thanks. I would be pretty interested if at least another 10% comes off the premium to NAV. Given the quality of the income, I might break my rule of never paying a premium to NAV. So, if the NAV stays constant and the premium unwinds to the point where yield is >5% I might be clicking the buy button. But I would have to sell something first. Given I have recently sold out of Unilever, there's no obvious sell candidate in my portfolio. Possibly SDRC would be sold.



Debt free SDRC with 43% of the shares family owned, 7% owned by Lindsell Train Ltd (we know N.Train's positive views on SDR) and another 5% held by the employee share scheme & Schroders Investment mgt Ltd. Hopefully they will be successful with their JV with BOCOM.

viewtopic.php?p=478499#p478499

Disclosure.."topped up" SDRC last week....but going off topic!.

Thanks. As I said, I don't have an obvious sell candidate now ULVR is gone :lol:

Apologies for off topic remarks.

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Re: Primary Health Properties (PHP)

#478957

Postby monabri » February 6th, 2022, 2:53 pm

I felt it was I who was going OT. :oops: ( my apologies)

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Re: Primary Health Properties (PHP)

#478962

Postby simoan » February 6th, 2022, 3:29 pm

BullDog wrote:
simoan wrote:Oh I forgot to mention, there's also £150m of convertible bonds due in 2025.

Hmmm. I think at a ~25% premium, those folks fishing for yield are going to increasingly find paying 125p for 100p of assets yielding ~4.5% quite a bit less attractive. Myself, I think the premium may well unwind here quite a bit more, even if NAV stays level. Of course, I may well be completely wrong about that. I won't pay a premium, that may be colouring my judgment.

Good call on the convertibles, that's going to cost a lot more to refinance in 2025 if it's not repaid. Having said that, how many folks look three years down the road?

The point I was making about the convertibles is that they ultimately convert into shares which will further dilute the NAV per share in the future. The bond conversion price is regularly being reduced to ensure the bond holders don't lose out. Here's the most recent announcement: https://www.investegate.co.uk/primary-h ... 00025517R/

Personally, I don't see the attraction of holding this company in an inflationary environment with rising interest rates, in the same way I have no interest in holding infrastructure funds or bonds. That is why the market is taking the share price down. I suspect the institutions selling know a lot more than I do about the forecast NAV. At least with bonds the underlying value of the bond is transparent. With REITs it is almost impossible to know what the NAV is at any point, particularly in the case of PHP with the regularity of their acquisitions and share issuance (number of shares in issue has doubled in the last 4 years). And now rising interest rates will also affect the discount rate used in the DCF calculation of NAV. I just can't invest in something which I can't value. Comparing it to other REITs holding very different types of property is a nonsense. I also don't like that PHP never disclose the Net Initial Yield of their acquisitions. That doesn't seem very transparent to me and makes me suspicious.

All the best, Si

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Re: Primary Health Properties (PHP)

#478976

Postby Dod101 » February 6th, 2022, 3:53 pm

simoan wrote:
BullDog wrote:
simoan wrote:Oh I forgot to mention, there's also £150m of convertible bonds due in 2025.

Hmmm. I think at a ~25% premium, those folks fishing for yield are going to increasingly find paying 125p for 100p of assets yielding ~4.5% quite a bit less attractive. Myself, I think the premium may well unwind here quite a bit more, even if NAV stays level. Of course, I may well be completely wrong about that. I won't pay a premium, that may be colouring my judgment.

Good call on the convertibles, that's going to cost a lot more to refinance in 2025 if it's not repaid. Having said that, how many folks look three years down the road?

The point I was making about the convertibles is that they ultimately convert into shares which will further dilute the NAV per share in the future. The bond conversion price is regularly being reduced to ensure the bond holders don't lose out. Here's the most recent announcement: https://www.investegate.co.uk/primary-h ... 00025517R/

Personally, I don't see the attraction of holding this company in an inflationary environment with rising interest rates, in the same way I have no interest in holding infrastructure funds or bonds. That is why the market is taking the share price down. I suspect the institutions selling know a lot more than I do about the forecast NAV. At least with bonds the underlying value of the bond is transparent. With REITs it is almost impossible to know what the NAV is at any point, particularly in the case of PHP with the regularity of their acquisitions and share issuance (number of shares in issue has doubled in the last 4 years). And now rising interest rates will also affect the discount rate used in the DCF calculation of NAV. I just can't invest in something which I can't value. Comparing it to other REITs holding very different types of property is a nonsense. I also don't like that PHP never disclose the Net Initial Yield of their acquisitions. That doesn't seem very transparent to me and makes me suspicious.

All the best, Si


I think Simoan is on the money here, as of course I would, considering that I have been making the same point about PHP's property portfolio. I will continue to hold but I am not sure that I would be buying it at the moment. BTW to consider selling Schroders or Unilever to buy it is something I do not understand.

Dod

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Re: Primary Health Properties (PHP)

#530108

Postby richfool » September 15th, 2022, 9:55 pm

I noted on the AIC website, a list from James Carthew entitled: "The UK’s most shorted investment companies", which included PHP amongst a number of other IT's and REIT's. The list also included Chrysalis Investments and BBOX. (EGL got a positive mention).:
12 September 2022
The FCA publishes disclosable short positions on UK stocks each day. A few closed-end funds appear on the list which makes for interesting reading.
The pound is sliding. This is hardly surprising given the state of the nation’s finances and the apparent sprouting of a magic money forest to fund tax cuts and energy price subsidies. Against this backdrop, I find it hard to be positive on the outlook for the UK market and it seems as though many investors agree as the UK is said to be the most shorted major market currently.

The FCA publishes a list of disclosable short positions on UK stocks each day and it makes for interesting reading. This article is based on the position at the close of business on 7 September.

The investment companies sector is not much affected by investors betting on a fall in target share prices, however a handful of names crop up.

Primary Health Properties (PHP )
seems a bit more unloved, with a 3.1% short position. It is trading on a sizable 12.6% premium to its 30 June adjusted net tangible assets per share. That alone might be the reason. However, investors may also be looking at the net initial yield on its portfolio of 4.57% and wondering whether this might start to rise (putting downward pressure on the NAV) in an environment of rising interest rates.

The company has a loan to value (LTV) ratio of 43%, equivalent to conventional gearing of 75%. At the end of June, the weighted average cost of PHP’s debt was 3%. Happily, 95% of that is on fixed or hedged terms for a period of just under eight years. A falling NAV would see the LTV ratio climb, but PHP says it is happy to operate with an LTV ratio of up to 50%.

https://www.theaic.co.uk/aic/news/cityw ... -companies

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Re: Primary Health Properties (PHP)

#530137

Postby monabri » September 15th, 2022, 11:42 pm

Short tracker info on PHP....it's been higher so I wouldn't panic!


https://www.shorttracker.co.uk/company/GB00BYRJ5J14/

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Re: Primary Health Properties (PHP)

#537901

Postby brightncheerful » October 16th, 2022, 1:57 pm

A client has a sizeable holding so I have also considered buying into PHP. Unlike the client who bought some time ago I would be buying sp at a premium which I would not want to do because it suggests growth which might not arise. As another has said, the buildings are single use. Even then the cost of conversion would have to be factored in. Seemingly the index-linked reviews are mostly capped so rental income is not keeping pace with inflation.

Another client has pharmacies in health centres, all of which suffered during lockdowns as the health centres either closed or had lower footfall.

If you are into steady as she goes then provided a discount to nav PHP would tick the boxes. But not for me.

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Re: Primary Health Properties (PHP)

#559274

Postby richfool » January 5th, 2023, 9:59 am

As a existing holder of PHP, whose holding is well in the red, I took the opportunity to top up this week before the notification of the first (increased) dividend for the new year, - this morning/below. The SP has been creeping up. I now have to watch to see how the NAV changes.

Ex Dividend Date: 12/01/23
Paid: 23/02/23.

Notification of dividend increase

Primary Health Properties PLC

("PHP" or the "Company")
Notice of Interim Dividend
and
Launch of Dividend Reinvestment Plan

The Company announces that the first quarterly interim dividend in 2023 of 1.675 pence per ordinary share of 12.5 pence each will be paid as to 1.34 pence by way of a Property Income Distribution ("PID") and the remainder as an ordinary dividend on 23 February 2023 to shareholders on the register on 13 January 2023. 

https://www.investegate.co.uk/primary-h ... 00067235L/

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Re: Primary Health Properties (PHP)

#559276

Postby Dod101 » January 5th, 2023, 10:12 am

richfool wrote:As a existing holder of PHP, whose holding is well in the red, I took the opportunity to top up this week before the notification of the first (increased) dividend for the new year, - this morning/below. The SP has been creeping up. I now have to watch to see how the NAV changes.

Ex Dividend Date: 12/01/23
Paid: 23/02/23.

Notification of dividend increase

Primary Health Properties PLC

("PHP" or the "Company")
Notice of Interim Dividend
and
Launch of Dividend Reinvestment Plan

The Company announces that the first quarterly interim dividend in 2023 of 1.675 pence per ordinary share of 12.5 pence each will be paid as to 1.34 pence by way of a Property Income Distribution ("PID") and the remainder as an ordinary dividend on 23 February 2023 to shareholders on the register on 13 January 2023. 

https://www.investegate.co.uk/primary-h ... 00067235L/


I assume we will not see any meaningful increase in NAV until interest rates start to come back again or at least until there is a real expectation that that will happen. Meanwhile we have a good yield of around 5.8%.

Dod

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Re: Primary Health Properties (PHP)

#559316

Postby Joda » January 5th, 2023, 12:27 pm

I was a touch disappointed with this uplift. Assuming that all four payments will be the same in 2023 (as is their previous pattern) then it represents a smaller uplift than in recent years. I had been hoping for 1.70 or even 1.725p a share.

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Re: Primary Health Properties (PHP)

#559458

Postby tjh290633 » January 5th, 2023, 8:20 pm

richfool wrote:As a existing holder of PHP, whose holding is well in the red, I took the opportunity to top up this week before the notification of the first (increased) dividend for the new year, - this morning/below. The SP has been creeping up. I now have to watch to see how the NAV changes.

You have noticed that there has been very little increase over the 2022 dividends? It had me fooled.

TJH


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