Primary Health Properties Share Discussion Threads

[mctmct] 06/3/2013 10:44

Daily Telegraph, 6 March

Primary Health Properties

338¼p -3¾p

Questor says Buy

Primary Health Properties (PHP) has an unbroken 15-year record of dividend increases. That's why the shares are ideal for income seekers.

PHP is a fully-listed real estate investment trust (REIT), which builds and manages doctors' surgeries and pharmacies on long-term contracts. It currently has 156 completed properties and has a further five it is committed to acquire. The total portfolio, including properties it is committed to buy, increased by 7pc over the year to £539.7m, when the £10.6m rise from a revaluation is factored in.

The rents from these assets provide financing to grow the portfolio and a dividend to investors. Because of the long-term nature of the leases, revenue streams are visible for many years to come and its portfolio is 100pc let.

The company's recent full-year update revealed a net asset value per share of 318.7p. Rental and related income increased by £3.8m to £30.7m. The average increase of 3pc on rent reviews completed in the year, combined with acquisitions and commitments, increased the annualised rent roll to £32.3m.

The prospective dividend yield in 2012 is 5.4pc, rising to 5.5pc next year.

The final dividend is 9.25p, which brought the total payment for the year to 18p. The payment will be made on April 5 and the shares trade without this the right to the dividend from March 7.

Earlier in the year, PHP completed a small share issue. Some 5.3m shares were issued in April at 305p, a 2.5pc discount to the price PHP was trading at at the time. The dilution which this caused has been recovered over the year as the share price has increased.

The company has £300m of debt, which it has secured or agreed terms to refinance for an average term of 4.6 years, which should ease concerns some investors had on this front. However, in its annual report on Monday PHP conceded that as the funding markets see credit availability decrease, the refinancing has been at higher margins.

Last tipped at 304p on November 22 last year, the shares remain a buy for income seekers.

[old crow] 01/3/2013 17:14

So PHP is down today no reflextion on the company value

Just petty day traders

[old crow] 01/3/2013 10:12

Apart from Utilities cant find a more secure share than PHP to put my money in
for income, that is unless we no longer need doctors.

[endintears] 01/3/2013 00:54

Profit before tax down to £1.1mil from £12.6mil, the main difference being a £10.8mil revaluation surplus in 2011 swinging to a £1.8mil deficit in 2012. Don't fully follow the details myself, was hoping to find some guidance here...

[mctmct] 28/2/2013 17:32

So what's in the results that explains the price drop?

mct

[stockrod43] 16/2/2013 23:21

anyone know when they go ex divi

[cestnous] 27/12/2012 13:13

Excellent buy write up in @shares' today; set to double amount spent last year on buying and developing new assets etc..

[old crow] 10/12/2012 09:39

This really is an income winner

10 December 2012

Primary Health Properties PLC



Primary Health Properties PLC ("PHP"), one of the largest providers of modern primary healthcare facilities, announces that a wholly owned subsidiary has entered into a contract to acquire a modern, purpose built medical centre in Bearwood, Poole for approximately £3.6 million (net assets acquired £3.6 million).

The construction of the building is to be completed shortly and it will be fully let and income producing on leases to a GP surgery, a pharmacy, a Co-Operative store encompassing two other retail units with a weighted average unexpired lease term of 19 years.

[old crow] 06/12/2012 15:38

The Crows just love PHP
WHY, because it brings us in £109 a week in divs

[ygor705] 05/12/2012 21:13

scburbs.....as I said in post 543 it's just too easy to make money but a heavy non-exec presence means that there is probably nobody there shaking out the kind of costs that you mention. To my mind this year's focus has been on refinancing and Harry's played a blinder. Perhaps next year he needs to focus more closely on the issues that you have mentioned. He's probably the only one in the office for long enough to do it!

[scburbs] 04/12/2012 20:47

ygor705,

Take care not to be confused by how the company is run. PHP is undoubtably a strong performer, but the management is massively outsourced in order for it to operate with non-execs. In 2011 Nexus got £2.3m and JOHCML £1.6m (collectively way over 10% of rent and the vast majority of the admin costs).

Nexus is the property manager and appear to be doing a good job. JOHCML is engaged for admin and accounting services. The fee here looks way excessive for a company where nearly all its properties are on long leases. I expect both parties are related to each other, but haven't checked. PHP should definitely be looking around for more competitive admin/accounting services as this is >5% of rents so has a big impact on operating margins. I would expect they could at least half that cost if they ran the function in house.

[ygor705] 04/12/2012 17:38

Beardmore. PHP has got a great track record, nothing in the way of voids and a cash flow underwritten by NHS spending (a political sacred cow in my opinion). Unless you genuinely believe that the Tories have got the guts to take a knife to the NHS at GP level then PHP looks reasonably bullet proof. What other company do you know where money is so easy to make that its predominently run by non execs? With its borrowings refinanced, I see a resumption of growth driven by the trend towards joint GP practices and smaller surgical sites to take routine procedures away from bigger (and often near-bankcrupt) hospitals. At a macro level, we have so much inflation pent up in the system that it must feed back into the property sector at some stage. Personally, despite equity dilution earlier in the year, I still like the shares.

[beardmore] 30/11/2012 19:42

I hold PHP but cannot work out why this is trading at such a premium to NAV. Makes me wonder whether it's time to take profits.

[ygor705] 30/11/2012 16:40

Surprised that there has been little comment on this Board for the past 3 months. The recent management statement appeared quite bullish to me in that a) there was a commitment to reestablish 100% dividend cover and b) recent refinancings were stated to make this achievable in the context of current rental rates in the market. Available finance is the oxygen supply of any property company and PHP has just taken a big mouthful.

[raysor] 21/9/2012 12:13

The Health Act 2012 should drive demand for new build, up -to-date facilities,in addition to the push for primary care services into GP control will help PHP.
So say Redmayne Bentley in the current issue of their Share Spotlight:

[cestnous] 26/8/2012 09:14

Primary Health Properties
339p
Questor says BUY 26/08/12
Primary Health Prop.

Shares in Primary Health Properties (PHP) are near their top of the trading range seen over the last year. However, the yield still looks attractive.
PHP is a real estate investment trust that builds modern GP surgeries and pharmacies. After an increase in the dividend payment in its recent interims, the company is on track to hit an unblemished record of 16 consecutive years of dividend rises.
Unlike commercial property investments, the income stream is quite secure, with 90pc paid by the NHS, and average remain lease term in the portfolio is 161 years.
In six months to June, rental income from the group's portfolio rose 6.3pc to £16m, with pre-tax profits falling to £4.2m from £12m. This fall is unconcerning. It was down to a much larger revaluation of the company's property portfolio in the first half of last year and higher finance charges. Stripping out the revaluation gain, operating profit was up 6.5pc to £13.4m.
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Importantly, the dividend was raised to 9.25p from 9p and it will be made on Oct 6. The shares have a prospective yield of 5.5pc rising to 5.6pc in 2013.
The main reason to hold the shares is as an income play, but there should be capital gains over time as the portfolio grows. The group has a "significant pipeline" of opportunities and £49m is in the hands of solicitors for the purchase of "high quality medical centre assets".
Demand for new, modern facilities should be driven by the Health and Social Care Act 2012 with the commissioning of primary care service into the hands of GPs.
Buy for income.

[mctmct] 22/8/2012 10:14

Decent half-year report and close to break-out on the chart. Top-up time if it falls much from here.

[mw8156] 08/8/2012 21:14

May be HICL will make an offer as they seem to be moving into primary care centres.

[ygor705] 08/8/2012 18:15

Good rise today.....we seem to be on the up!

[goliard] 02/8/2012 09:46

Yes, looks good overall. Their big problem is their SWAP. If interest rates stay low they will be carrying a huge non-cash loss on it which will become a real loss if they pay it off or interest rates don't rise again during the term. I think there are quite a few years left on it, so with any luck it should sort itself out.

[ygor705] 02/8/2012 08:31

Thanks DofD - an additional £75 milion on an unsecured basis could be a useful addition in an unhealthy bank lending environment. PHP certainly looks to be shoring up its finances at the moment. Positive I think!

[edwardt] 11/7/2012 13:01

the new bond is not secured - hence higher coupon.

[daveofdevon] 08/7/2012 11:48

The prospectus for the bond says upto £75 million

[ygor705] 08/7/2012 09:52

Does anybody know how much has been/is to be raised from the private bond? The recent 10% equity dilution by way of private placement is unlikely to help the share price in the shorter term.

[scburbs] 03/7/2012 12:58

Goliard,

An interesting bond issue. It is not comparable with the AGR offer as this is a retail bond (the security offered is also unclear whereas AGR bond provided mortgage security).

It does look expensive, but perhaps this is a price that PHP is prepared to pay for diversifying its borrowing/fundraising base and becoming known to a wider range of investors. I don't think this is indicative of PHP's best borrowing rate given they paid 4% for 7 year Aviva money in November 2011.