The Lemon Fool

shetland wrote:I recently sold PHP, very reluctantly. It had been one of my best performers but the premium had reached 45% and couldn’t see the price rising much in the future. It is an excellent sector of the market but the requirement to distribute 90% of profits as dividends means that it can only grow by issuing more share.

Primary Health Properties PLC ("PHP" or the "Group"), one of the UK's leading investors in modern primary healthcare facilities, announces that, further to its announcement on 11 May 2020 of the acquisition of a portfolio of medical centres, it has today completed on the acquisition of the last of the conditional purchases referred to in that announcement, for a price of £3.6 million. This completes the purchase of the entire portfolio of 22 properties.

Dod101 wrote:

shetland wrote:I recently sold PHP, very reluctantly. It had been one of my best performers but the premium had reached 45% and couldn’t see the price rising much in the future. It is an excellent sector of the market but the requirement to distribute 90% of profits as dividends means that it can only grow by issuing more share.

I like the income. I mentioned the need to keep raising capital in my earlier post and that is of course a negative. So what are you buying. I see you are intending to sell SSE as well.

Dod

Dod101 wrote:

shetland wrote:I recently sold PHP, very reluctantly. It had been one of my best performers but the premium had reached 45% and couldn’t see the price rising much in the future. It is an excellent sector of the market but the requirement to distribute 90% of profits as dividends means that it can only grow by issuing more share.

I like the income. I mentioned the need to keep raising capital in my earlier post and that is of course a negative. So what are you buying. I see you are intending to sell SSE as well.

Dod

shetland wrote:I am moving to a portfolio of global IT’s and funds with satellites in those areas I want to be overweight such as Asia Pacific, Healthcare. We have no need for income as we have good final salary pensions.

If you are looking income have you considered Chesnara. They have increased their dividend in year for the last 15 years and now yield 7%. I still hold them.

Dod101 wrote:

shetland wrote:I am moving to a portfolio of global IT’s and funds with satellites in those areas I want to be overweight such as Asia Pacific, Healthcare. We have no need for income as we have good final salary pensions.

If you are looking income have you considered Chesnara. They have increased their dividend in year for the last 15 years and now yield 7%. I still hold them.

Treasure your final salary pensions. I hold Chesnara and also Phoenix Holdings. Phoenix has been a little better on the capital front but suffers (or at least the shareholders suffer) from dilution with the various deals they have been making using their shares to some extent.

Dod

shetland wrote:

Dod101 wrote:

shetland wrote:I am moving to a portfolio of global IT’s and funds with satellites in those areas I want to be overweight such as Asia Pacific, Healthcare. We have no need for income as we have good final salary pensions.

If you are looking income have you considered Chesnara. They have increased their dividend in year for the last 15 years and now yield 7%. I still hold them.

Treasure your final salary pensions. I hold Chesnara and also Phoenix Holdings. Phoenix has been a little better on the capital front but suffers (or at least the shareholders suffer) from dilution with the various deals they have been making using their shares to some extent.

Dod

What is your view of Chesnara ?

Earnings and dividend growth

· Adjusted EPRA earnings per share increased by 7.1% to 3.0 pence (30 June 2019: 2.8 pence)

· Average uplift of 2.2% per annum on rent reviews completed in the period, continuing the positive trend in rental growth (FY 2019: 1.9%; FY 2018: 1.4%)

· Additional annualised rental income of £0.9 million or 0.7%, on a like-for-like basis, from rent reviews and asset management projects (FY 2019: £1.9 million or 1.5%; FY 2018: £1.3 million or 1.8%)

· Contracted annualised rent roll increased by 4.4% to £133.3 million (31 December 2019: £127.7 million)

· Portfolio of 22 purpose-built medical centres acquired for £54 million with good asset management opportunities

· Four forward funded developments acquired in the period with a net development cost of £27 million at Arklow, Ireland, Banagher, Ireland, Epsom, Surrey and Llanbradach, Wales

· Two quarterly dividends totalling 2.95p per share distributed in the period and third quarterly dividend of 1.475p per share declared, payable on 21 August 2020, equivalent to 5.9p on an annualised basis and a 5.4% increase over the 2019 dividend per share representing the Company's 24th consecutive year of dividend growth

· The Company intends to make a further dividend payment in November 2020 and maintain its strategy of paying a progressive dividend, in equal quarterly instalments, covered by underlying earnings in each financial year

Highlights

- Proposed Placing to raise approximately £120 million of gross proceeds

- The tragic associated impact of COVID-19 brings the ongoing requirement to cater for NHS surge capacity ever more starkly into focus. The Board believe this, combined with the demands of an ageing and growing population for healthcare, strongly underpins the need for modern, integrated and local primary healthcare facilities to continue to help relieve pressures placed on hospitals and A&E departments.

- Proceeds will be used to fund continued portfolio growth through acquisition and forward funded developments and to finance asset management projects totalling c.£128m

o Short-term estimated pipeline of £92 million of active acquisition and development opportunities across UK and Ireland

o Active management of existing assets to create additional value with estimated capex on projects in FY20 and FY21 of c.£36m

- Proposed Placing helps to maintain an appropriate loan to value % (LTV) in the short-term reducing the 30 June 2020 ratio by around 5.0% from 45.8% to c.41% on a pro-forma basis

- Placing Shares will not rank for the third quarterly interim dividend of 1.475p per share declared on 25 June 2020 and payable on 21 August 2020 to shareholders on the register on 3 July 2020 but will rank for all future dividends declared. The Company intends to make a further interim dividend payment in November 2020 and maintain its strategy of paying a progressive dividend, in equal quarterly instalments, covered by underlying earnings in each financial year

The Company announces that the fourth quarterly interim dividend in 2020 of 1.475 pence per ordinary share of 12.5 pence each will be paid on 20 November 2020 to shareholders on the register on 9 October 2020. The dividend will comprise a Property Income Distribution (PID) of 1.0 pence per share and an ordinary dividend of 0.475 pence per share. The Company will be offering a scrip alternative with this dividend.


Ex Div 8 Oct 20.

Div paid 20 Nov 20

https://www.investegate.co.uk/primary-h ... 00076711A/

The Board of PHP (the "Board") announces that it has entered into a conditional share purchase agreement, subject to shareholder approval, to internalise the Company's management function (the "Internalisation") by acquiring Nexus Tradeco Holdings Limited which is the holding company of its longstanding external property adviser Nexus Tradeco Limited and certain subsidiaries, including Nexus's primary care development business (together "Nexus") (the "Acquisition"). PHP has agreed to acquire the entire issued ordinary share capital of Nexus Tradeco Holdings Limited for a total consideration of £33.1 million (subject to a completion net assets adjustment), made up of £16.55 million payable in cash and £16.55 million satisfied by the issue of 11,485,080(1) new ordinary shares of 12.5 pence each in the share capital of PHP at a price of 144.1 pence per share.

The Board believes that there are a number of compelling financial and strategic benefits of the Acquisition, as the Internalisation is expected to result in immediate and longer-term Adjusted EPRA EPS enhancement, with some minor one-off EPRA NAV dilution. The Board further believes that the Internalisation will:

· Secure a structure that is more appropriate to a UK-REIT of the scale of PHP which will broaden interest in the investment community, reduce costs and improve Shareholder returns;

· Help to secure the continuity of the well-regarded and experienced Nexus management team; including the services of Harry Hyman as CEO of PHP from completion of the Acquisition, consistent with the commitments he made at the time of the MedicX merger; and

· Enhance management succession for the Group for the longer-term.

idpickering wrote:Proposed acquisition & management internalisation

https://www.investegate.co.uk/primary-h ... 00071425I/

dealtn wrote:

idpickering wrote:Proposed acquisition & management internalisation

https://www.investegate.co.uk/primary-h ... 00071425I/

I'm not a holder, but that's a sizeable related party acquisition. Not saying there is anything untoward, and there is the opportunity to vote, but whilst the RNS says the Board is happy and is expected to be in the interests of all shareholders, it remains the case the 100% owner of the acquired business is the significant shareholder in the acquirer. He will be partly paid in new equity which is trading towards the lowest price the shares have been all year, compared to the wider market which has recently rallied 20% or so.

absolutezero wrote:

dealtn wrote:

idpickering wrote:Proposed acquisition & management internalisation

https://www.investegate.co.uk/primary-h ... 00071425I/

I'm not a holder, but that's a sizeable related party acquisition. Not saying there is anything untoward, and there is the opportunity to vote, but whilst the RNS says the Board is happy and is expected to be in the interests of all shareholders, it remains the case the 100% owner of the acquired business is the significant shareholder in the acquirer. He will be partly paid in new equity which is trading towards the lowest price the shares have been all year, compared to the wider market which has recently rallied 20% or so.

So let me get this right.
Harry Hyman is on the board of PHP.
Harry Hyman owns 100% of this company that PHP is buying (which also just so happens to perform an admin function for PHP).
PHP will create the best part of £17million of new shares and bung him a similar amount in cash.
Hyman will then also become CEO of PHP.

If they were desperate to secure Hyman's services then just give him a contract and pay him like normal.

Is there a funny smell here?

I've been hovering over the sell button on PHP for a while. Wondering if I should now click it.

idpickering wrote:

absolutezero wrote:

dealtn wrote:
I'm not a holder, but that's a sizeable related party acquisition. Not saying there is anything untoward, and there is the opportunity to vote, but whilst the RNS says the Board is happy and is expected to be in the interests of all shareholders, it remains the case the 100% owner of the acquired business is the significant shareholder in the acquirer. He will be partly paid in new equity which is trading towards the lowest price the shares have been all year, compared to the wider market which has recently rallied 20% or so.

So let me get this right.
Harry Hyman is on the board of PHP.
Harry Hyman owns 100% of this company that PHP is buying (which also just so happens to perform an admin function for PHP).
PHP will create the best part of £17million of new shares and bung him a similar amount in cash.
Hyman will then also become CEO of PHP.

If they were desperate to secure Hyman's services then just give him a contract and pay him like normal.

Is there a funny smell here?

I've been hovering over the sell button on PHP for a while. Wondering if I should now click it.

An interesting take on this absolutezero. I don't detect a funny smell. I hold PHP, and am glad of the weakness in the share price currently, as I intend buying more of their shares soon.

Ian.