Primary Health Properties (PHP)

[Dod101]

Disposal of 13 assets for £27.7 million.

Primary Health Properties PLC ("PHP"), one of the UK's leading investors in modern primary healthcare facilities, announces that it has exchanged contracts to sell a portfolio of 13 smaller medical centres, located across England and Wales, for a price of £27.7 million.

The sale price is 13% above PHP's 31 December 2021 book value, representing around 60bps of yield compression.

Following completion of the sale, which is anticipated to take place later in July 2022, PHP's portfolio will comprise 511 assets, of which 20 are in Ireland, with a contracted rent roll of just under £143 million.

Harry Hyman, Chief Executive Officer of Primary Health Properties, commented:

"We are delighted to have been able to achieve such a strong price for this portfolio of medical centres, which comprises smaller facilities significantly below our average lot size. The disposal will allow us to deploy the proceeds into our strong pipeline across the UK and Ireland which we believe will deliver stronger returns."

https://www.investegate.co.uk/primary-h ... 00086016R/

Ian.

Obviously this is not earth shattering but it is good to have evidence that they seem to be conservatively valuing their assets, and it will give than a decent capital gain.

The news just keeps on coming this morning.

Dod

[idpickering]

Investor Presentation.

Primary Health Properties PLC (LSE: PHP), one of the UK's leading investors in modern primary healthcare facilities, is pleased to announce that Harry Hyman, CEO and Richard Howell, CFO will be presenting live, via the Investor Meet Company platform, the Group's Interim results for the six months ended 30 June 2022 on Thursday, 28 July 2022 at 2:30pm BST.

The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9am the day before the meeting or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet PRIMARY HEALTH PROPERTIES PLC via:

https://www.investormeetcompany.com/pri ... r-investor

Investors who already follow PRIMARY HEALTH PROPERTIES PLC on the Investor Meet Company platform will automatically be invited.

https://www.investegate.co.uk/primary-h ... 00067036R/

Ian.

[idpickering]

Acquisition.

Acquisition of Medical Centre in Newbury.

Primary Health Properties, one of the UK's leading investors in modern primary healthcare facilities, announces that it has acquired the Strawberry Hill Medical Centre, Newbury for a total consideration of £7.25 million.

The property is fully let to two GP practices, providing 100% government backed income, with an unexpired term of 19 years; serving substantial patient lists; and benefiting from facilities for carrying out broader medical services such as minor operations and blood tests.

Following completion, PHP's portfolio will comprise 512 assets, of which 20 are in Ireland, with a contracted rent roll of £143 million.

Harry Hyman, Chief Executive Officer of Primary Health Properties, commented:

"We are delighted to have acquired this medical centre which acts as a hub for the delivery of primary care and broader medical services in the growing town of Newbury. The property also provides accommodation for district nurses, a clinical pharmacy and social prescribing services.

"We have a strong pipeline of opportunities in the UK and Ireland and are well positioned to continue to grow our portfolio selectively and to support the healthcare systems in these markets through the provision of modern, primary care infrastructure."

https://www.investegate.co.uk/primary-h ... 00065257T/

I hold these and am looking at buying more of their shares soon.

Ian.

[idpickering]

Interim results for the six months ended 30 June 2022.

Harry Hyman, Chief Executive of PHP, commented:

"We are encouraged by the firmer tone of rental growth experienced in the period from the ongoing rent reviews and asset management projects successfully completed. Furthermore, with the majority of PHP's debt either fixed or hedged for a weighted average period of just under eight years the Board remains confident that PHP can continue to deliver further earnings and dividend growth.

"Notwithstanding the outlook for longer-dated interest rates the investment market has remained robust in the first half of the year and we have continued to see further net initial yield compression in both the UK and Ireland.

"NHS initiatives to modernise and invest in the primary care estate support the important role that primary healthcare as a first line of defence must play to re-focus services away from over-burdened hospital settings, and to satisfy increased demand, driven by the long-term demographic trends of populations that are growing, ageing and suffering from more instances of chronic illness. We continue to maintain close relationships with our key stakeholders, working closely with the NHS in the UK, HSE in Ireland, and our GP partners in both markets to help them evolve and adapt as the 'new normal' is established."

DELIVERING EARNINGS AND DIVIDEND GROWTH

· Adjusted earnings per share increased by 9.7% to 3.4p (30 June 2021: 3.1p)

· Contracted annualised rent roll increased by 2.5% to £144.2 million (31 December 2021: £140.7 million)

· Additional annualised rental income on a like-for-like basis of £1.8 million or 1.3% from rent reviews and asset management projects (H1 2021: £1.3 million or 1.0%; FY 2021: £2.4 million or 1.8%)

· EPRA cost ratio 10.5% (FY 2021: 9.3%), representing the lowest in the UK REIT sector

· Three quarterly dividends totalling 4.875 pence per share distributed or declared in the year-to-date equivalent to 6.5 pence per share on an annualised basis, a 4.8% increase over 2021 (6.2 pence per share) and marking the Company's 26th consecutive year of dividend growth

DELIVERING NET ASSET VALUE GROWTH

· Adjusted Net Tangible Assets ("NTA") per share increased by 3.5% to 120.8 pence (31 December 2021: 116.7 pence)

· Property portfolio valued at £2.9 billion at 30 June 2022 (31 December 2021: £2.8 billion) reflecting a net initial yield of 4.57% (31 December 2021: 4.64%)

· Revaluation surplus in the period of £51.2 million (30 June 2021: £66.9 million), representing growth of 1.8% (30 June 2021: 2.6%) with approximately half of the valuation surplus coming from rental growth driven by rent reviews and asset management projects

· Post period end disposal of 13 smaller assets for £27.7 million, sale price was 13% above 31 December 2021 book values and represented 60 bps of yield compression

· Strong pipeline of targeted acquisitions, developments and asset management projects with a value of approximately £187 million in the UK and £98 million (€114 million) in Ireland of which £123 million and £43 million (€50 million) is in legal due diligence in both countries

· Portfolio in Ireland now comprises 20 assets, valued at £228 million (€265 million) (31 December 2021: £213 million / €253 million)

· The portfolio's metrics continue to reflect the Group's secure, long-term and predictable income stream with occupancy at 99.7% (31 December 2021: 99.7%) and a WAULT of 11.4 years (31 December 2021: 11.6 years)

· Strong progression of asset management projects with 14 completed in the period and a further 8 currently on-site, investing £14.9 million, creating additional rental income of £0.3 million per annum and extending the weighted average unexpired lease term (WAULT) back to over 20 years

And later;

The Company will pay a third interim dividend of 1.625 pence per Ordinary Share for the year ending 31 December 2022, payable on 19 August 2022. The dividend will comprise a Property Income Distribution ("PID") of 0.8 pence per share and an ordinary dividend of 0.825 pence per share. The Company will be offering a scrip alternative with this dividend.

https://www.investegate.co.uk/primary-h ... 00118345T/

Ian.

[idpickering]

Value Creation Award Win.

Winner of MSCI's Highest 10-Year Risk Adjusted Total Return Award

Primary Health Properties PLC (LSE: PHP), one of the UK's leading investors in modern primary healthcare facilities, is pleased to announce that it has once again won the award for the Highest 10-Year Risk Adjusted Total Return at the MSCI UK Property Investment Awards, with an annualised 10-year total return of 8.41%.

PHP previously won the award in 2018, demonstrating the Group's consistency in delivering strong returns as it continues to build on its twenty-six year track record of dividend growth and value creation for shareholders.

https://www.investegate.co.uk/primary-h ... 00126966A/

I hold these, and topped up my holdings last week. I'm tempted to buy even more of their shares tbh.

Ian.

[idpickering]

Notice of Interim Dividend.

The Company announces that the fourth quarterly interim dividend in 2022 of 1.625 pence per ordinary share of 12.5 pence each will be paid as to 0.8 pence by way of a Property Income Distribution ("PID") and as to 0.825 pence by way of an ordinary dividend on 25 November 2022 to shareholders on the register on 14 October 2022.

The Company will not be offering a scrip alternative with this dividend in the light of current market conditions and the reduction in the Company's share price.

Certain qualifying shareholders may receive PIDs without deduction of withholding tax and further details are available on the Company's website http://www.phpgroup.co.uk .

Ex dividend 13 Oct 22, paid 25 Nov 22.

Ian.

[idpickering]

Convertible Bond Adjustment.

Primary Health Properties PLC, a leading investor in modern primary health facilities, announces that the exchange price for new ordinary shares of 12.5p each in PHP ("Ordinary Shares") to be issued in exchange for the preference shares in the Company's wholly owned subsidiary PHP Finance (Jersey No.2) Limited ("PHP Jersey") (ISIN: XS2016141637) issued on conversion of the 2.875% Guaranteed Convertible Bonds due 2025 (the "Convertible Bonds") has been adjusted to £1.3769 per Ordinary Share in accordance with condition 6.3 (D) of the conditions of issue of the Convertible Bonds.

There are currently £150,000,000 nominal of Convertible Bonds outstanding.

https://www.investegate.co.uk/primary-h ... 00008349C/

Ian.

[idpickering]

Succession Planning.

Primary Health Properties, one of the UK's leading investors in modern primary healthcare facilities, announces that Harry Hyman, Chief Executive Officer ("CEO"), has expressed his intention to retire as Chief Executive Officer of PHP at its annual general meeting in 2024 ("2024 AGM").

This intention is consistent with the comments communicated to the market at the time of the Medicx merger announced in January 2019 that he would commit to managing PHP for a further five years.

PHP will therefore be commencing the search for a new CEO in the New Year and it is expected to be in a position to make an appointment during 2023, with the intention of it taking effect from the 2024 AGM.

The search for Harry Hyman's successor will be led by the Chairman, Steven Owen, who, after consultation with a number of the Group's major shareholders and the agreement of the Board, will, subject to shareholder approval at the 2023 AGM, remain as Chairman until the conclusion of the 2024 AGM in order to deal with the appointment of the new CEO and to ensure an orderly succession.

Steven Owen was appointed as a Non-Executive Director in January 2014 and Chairman in April 2018. Under the UK Corporate Governance Code ("the Code") he will have served nine years by January 2023 and while from this date he will not be considered independent under the provisions of the Code the independent non-executive directors concluded that Steven continues to act independently and that the company will benefit significantly from him leading the CEO succession process. Accordingly, Steven Owen will continue to be Chairman of the Company and the Nomination Committee and a member of the ESG Committee until his proposed retirement at the 2024 AGM. He will cease to be a member of the Remuneration Committee from 31st December 2022.

https://www.investegate.co.uk/primary-h ... 00043476J/

Ian.

[Dod101]

Doesn't sound like brilliant succession planning does it? Both the Chairman and the CEO will retire at the 2024 AGM.

Dod

[idpickering]

Doesn't sound like brilliant succession planning does it? Both the Chairman and the CEO will retire at the 2024 AGM.

Dod

Agreed Dod. Thanks for your input. For me, I'm a bit disappointed that I'm well in the red on these despite topping up my holdings five times in the last 18 months. Either way, if they keep paying out as they do, I'll be fairly happy I guess.

Ian.

[Dod101]

Doesn't sound like brilliant succession planning does it? Both the Chairman and the CEO will retire at the 2024 AGM.

Dod

Agreed Dod. Thanks for your input. For me, I'm a bit disappointed that I'm well in the red on these despite topping up my holdings five times in the last 18 months. Either way, if they keep paying out as they do, I'll be fairly happy I guess.

Ian.

In an era of very low interest rates, their shares were at a premium. I do not know where they sit now re NAV but much more realistic I'd guess. There is not a lot of opportunity for real capital appreciation , except as an income play.

Dod

[idpickering]

In an era of very low interest rates, their shares were at a premium. I do not know where they sit now re NAV but much more realistic I'd guess. There is not a lot of opportunity for real capital appreciation , except as an income play.

Dod

I hear you Dod, thanks. To be fair, I bought them for the income anyway, so I should remember that.
As for NAV HL have the PHP PE as being nearly 18. See; https://www.hl.co.uk/shares/shares-sear ... ary-shares

Either way, I don't intend selling my PHP holdings any time soon.

Ian.

[Dod101]

In an era of very low interest rates, their shares were at a premium. I do not know where they sit now re NAV but much more realistic I'd guess. There is not a lot of opportunity for real capital appreciation , except as an income play.

Dod

I hear you Dod, thanks. To be fair, I bought them for the income anyway, so I should remember that.
As for NAV HL have the PHP PE as being nearly 18. See; https://www.hl.co.uk/shares/shares-sear ... ary-shares

Either way, I don't intend selling my PHP holdings any time soon.

Ian.

If that 5.67% yield is about right then surely they are worth buying at the current price, for any income investor, but that is really their main attraction.

Dod

[idpickering]

If that 5.67% yield is about right then surely they are worth buying at the current price, for any income investor, but that is really their main attraction.

Dod

Agreed. Dividenddata have them at 5.86%. See; https://www.dividenddata.co.uk/dividend ... y?epic=PHP

Ian.

[Arborbridge]

Doesn't sound like brilliant succession planning does it? Both the Chairman and the CEO will retire at the 2024 AGM.

Dod

Agreed Dod. Thanks for your input. For me, I'm a bit disappointed that I'm well in the red on these despite topping up my holdings five times in the last 18 months. Either way, if they keep paying out as they do, I'll be fairly happy I guess.

Ian.

In an era of very low interest rates, their shares were at a premium. I do not know where they sit now re NAV but much more realistic I'd guess. There is not a lot of opportunity for real capital appreciation , except as an income play.

Dod

I haven't looked around lately, but aren't many shares valued at more than their net assets.?

[Dod101]

Doesn't sound like brilliant succession planning does it? Both the Chairman and the CEO will retire at the 2024 AGM.

Dod

Agreed Dod. Thanks for your input. For me, I'm a bit disappointed that I'm well in the red on these despite topping up my holdings five times in the last 18 months. Either way, if they keep paying out as they do, I'll be fairly happy I guess.

Ian.

In an era of very low interest rates, their shares were at a premium. I do not know where they sit now re NAV but much more realistic I'd guess. There is not a lot of opportunity for real capital appreciation , except as an income play.

Dod

I haven't looked around lately, but aren't many shares valued at more than their net assets.?

I should think so but PHP were at a high premium for some time when interest rates were low. The other think is that I guess their assets are valued on a DCF basis. Now that interest rates are higher, so is the DCF so the assets are valued at a lower figure, similarly to windfarm assets and the like. Share prices are likely to drop in these circumstances.

Dod

[MDW1954]

In an era of very low interest rates, their shares were at a premium. I do not know where they sit now re NAV but much more realistic I'd guess. There is not a lot of opportunity for real capital appreciation , except as an income play.

Dod

I hear you Dod, thanks. To be fair, I bought them for the income anyway, so I should remember that.
As for NAV HL have the PHP PE as being nearly 18. See; https://www.hl.co.uk/shares/shares-sear ... ary-shares

Either way, I don't intend selling my PHP holdings any time soon.

Ian.

Ian,

In a discussion of NAV, I'm not sure why you're introducting a PE figure, but PHP's preferred NAV measure is NTA (Net Tangible Assets), with a figure of 120.8 pence per share on 30 June 2022. The next valuation point will be 31 December 2022; PHP only issues them every six months.

We simply do not know, then, is the answer. But Dod is right: with sharply rising interest rates, we can expect the NAV and share price to pull back. We see the same thing right across the REIT space, with my spreadsheet showing most of them on a discount where not so long ago they were on a premium.

MDW1954

[idpickering]

In an era of very low interest rates, their shares were at a premium. I do not know where they sit now re NAV but much more realistic I'd guess. There is not a lot of opportunity for real capital appreciation , except as an income play.

Dod

I hear you Dod, thanks. To be fair, I bought them for the income anyway, so I should remember that.
As for NAV HL have the PHP PE as being nearly 18. See; https://www.hl.co.uk/shares/shares-sear ... ary-shares

Either way, I don't intend selling my PHP holdings any time soon.

Ian.

Ian,

In a discussion of NAV, I'm not sure why you're introducting a PE figure, but PHP's preferred NAV measure is NTA (Net Tangible Assets), with a figure of 120.8 pence per share on 30 June 2022. The next valuation point will be 31 December 2022; PHP only issues them every six months.

We simply do not know, then, is the answer. But Dod is right: with sharply rising interest rates, we can expect the NAV and share price to pull back. We see the same thing right across the REIT space, with my spreadsheet showing most of them on a discount where not so long ago they were on a premium.

MDW1954

Thanks for your ever welcome input Malcolm. You are of course right to point out my error about talking about pe.

As for PHP, I like the business and am very happy to continue holding the shares, along with the other REITs I hold of which you are aware.

Ian.

[Dod101]

In an era of very low interest rates, their shares were at a premium. I do not know where they sit now re NAV but much more realistic I'd guess. There is not a lot of opportunity for real capital appreciation , except as an income play.

Dod

I hear you Dod, thanks. To be fair, I bought them for the income anyway, so I should remember that.
As for NAV HL have the PHP PE as being nearly 18. See; https://www.hl.co.uk/shares/shares-sear ... ary-shares

Either way, I don't intend selling my PHP holdings any time soon.

Ian.

Ian,

In a discussion of NAV, I'm not sure why you're introducting a PE figure, but PHP's preferred NAV measure is NTA (Net Tangible Assets), with a figure of 120.8 pence per share on 30 June 2022. The next valuation point will be 31 December 2022; PHP only issues them every six months.

We simply do not know, then, is the answer. But Dod is right: with sharply rising interest rates, we can expect the NAV and share price to pull back. We see the same thing right across the REIT space, with my spreadsheet showing most of them on a discount where not so long ago they were on a premium.

MDW1954

I hope and expect that the market will have anticipated a drop in the NAV to 31 December but time will tell

Dod

[richfool]

We simply do not know, then, is the answer. But Dod is right: with sharply rising interest rates, we can expect the NAV and share price to pull back. We see the same thing right across the REIT space, with my spreadsheet showing most of them on a discount where not so long ago they were on a premium.

Re the pull back, I would suggest that most of that has taken place already. The question for me now is how much more interest rates are expected to increase and if that has all been priced in. I can't envisage that there is much more to go and that whatever that is, it will already be mostly priced in.