Primary Health Properties Share Discussion Threads

[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.

[goliard] 03/7/2012 10:09

Interesting to compare their bond issuance with Assura's. Assura managed £110m for 10 years at 4.75%, which looks like far better terms than PHP.

[losos] 22/5/2012 13:34

DAVEOFDEVON / dumpling2 / Robco
Thanks for explanation, I must say I too feel somewhat annoyed that certain institional investors have been given the chance to buy shares at a discount, in fact I thought that was against the stock exchange rules, but clearly I am wrong. How long before the share price gets back to what it was before the 'placing' ????

[robcoo] 18/5/2012 16:48

Wouldn't it be nice if shareholders were invited to participate? Discounted offers excluding shareholders seem to happen with regularity and I resent it

[robcoo] 18/5/2012 16:48

Wouldn't it be nice if shareholders were invited to participate? Discounted offers excluding shareholders seem to happen with regularity and I resent it

[dumpling2] 18/5/2012 11:52

Everything to do with it. Institutional investors only.

[daveofdevon] 18/5/2012 09:13

Presumable due to this mornings share placing at a discount

[losos] 18/5/2012 08:55

3.8% down today, anyone got any ideas on that? I note one of their lenders is Santander but thet is (I assume) the UK bank not the Spanish one, seems an unusualy large movement.

[beardmore] 19/4/2012 17:11

Thanks Shauney2. I'm a happy long-term holder.

[shauney2] 19/4/2012 14:09

Note from Edison.

[stupidboypike] 11/4/2012 08:49

Thanks guys, I'll research, any more welcomed.

Best regards

SBP

[daveofdevon] 11/4/2012 08:40

You could look at Infrastructure funds. They have similar characteristics to PHP both being related to tangible assets and both having the government as the ultimate tenant. In addition to PHP I have funds in HICL and JLIF, they have grown very slowly but constantly for years and pay a good yield.

[goliard] 11/4/2012 08:20

AGR and MXF are the two obvious ones. AGR has had a horrible few years as they sold off non core business, but is now pure prop co and also develops its own sites. No SwAP issues with AGR either as they paid to cancel it, so new investors are on a good thing whilst old ones took the pain. MXF is almost the same as AGR, but pays a higher dividend, however, the dividend is not covered by profits, so I don't like it as much. If investors stop funding them then they will have to cut the dividend. I also expect further consolidation in this market at some point which should benefit all of these, but my pick right now is AGR and they have just moved to paying a quarterly dividend.

[stupidboypike] 11/4/2012 07:58

Does anyone know any similar shares to PHP? I'm keen to put a small block of funds into PHP before too long. The way I see it, it yields around 6% and is about as safe as a share can get (any different views welcome for debate). To spread the risk I'd like to invest in some more similar ones. I'm looking for shares you can buy and forget forever and have a pretty good yield.

Best regards

SBP

[ygor705] 06/4/2012 17:56

Golliard...I'm not sure that I follow the logic of your argument that PHP will have to take a one off hit on swaps. I admit that if php are taking uncovered positions in swaps then that could happen but the whole point in taking a swap out is usually to insulate a stream of variable rate interest payments against future rate increases. Now it may well be that they could have made more money if they hadn't taken the swap out in the first place but I dont see where the hit is coming from.

[goliard] 04/4/2012 07:35

Thanks ygor. This sector has traditionally had longer term debt due to the correlation with NHS leases and banks seeing it as a safer haven. On the SWAP, PHP has bought out the banks right to call the SWAP in, so that risk is no longer there. I guess they are hoping that the SWAP really does act as an effective hedge against rates rising, but unfortunately the SWAP would need to be neutral now to achieve that and it is not. I can see a significant one off hit here in the future, but perhaps stability after that. I agree that rates are unlikely to rise quickly, but I would expect them at around 2% within a few years... But who knows?

[ygor705] 03/4/2012 21:06

Goliard - its very unusual for bank financing to be longer than 5 years. Historically the Corporate Bond market catered for longer term obligations but that got steadily squeezed to the point of collapse by burgeoning public sector debt issuers.

I've not looked too closely at all of the swap arrangements here but I would expect them to be tracking the term of the debt obligations. Hence, whether there is a surplus or a deficit, this should run back to zero as loans come up for refinancing. This is, of course, absent any early termination events and I would remind you that every overdraft in the country can be terminated tomorrow if Banks so wish, so it's a constant threat that we all have to live (or die) with.

Not sure that I can see interest rates rising quickly from here. Some 3 year personal fixed rate bonds are currently paying less than 2 year maturities and most economies in Europe look likely to be overstretched for the foreseeable future. As long as PHP stays close to the NHS it is an indirect triple A risk in my view and lenders will be tripping over themselves to lend. The equity risk is a bit more variable but at these levels I'm in.

Noted your post 510 by the way. Had missed that one ............. but won't in the future!

[goliard] 03/4/2012 09:53

I don't like the sound of the new financing. Very short term and they need to do it all over again in 3 years time (ie one year before it ends). We could easily be looking at higher interest rates by that time. Also, the banks had an option to call in the company's SWAP and they have paid £80,000 to remove this serious threat. This is good news, but still leaves a significant SWAP deficit. Whilst the SWAP deficit will reduce if interest rates increase, they will be hit be higher borrowing costs in the fairly near term. I doubt the market will pay much attention to this at the moment, but it looks particularly unattractive to me and a bit of a ticking time bomb. Happy to be corrected if anyone else think I have looked at this the wrong way, but I would no longer wish to hold these shares and now prefer AGR. AGR had a terrible track record, but now looks better value for new investors as it has cancelled its SWAP and has longer term facilities and has moved to quarterly dividends (allbeit at a lower starting yield that PHP currently pays).

[losos] 26/3/2012 13:12

ygor705 - Thanks for the input on loans, don't have much time these days to look here hence delay in responding!!
Old crow - Like you, I would prefer if PHP didn't get swallowed up by the likes of Aviva or whoever, I like to think of PHP as a nice little earner that is below the radar on the big boys screens!!!

[old crow] 24/3/2012 18:17

Cant remember where but noted AVIVA could be interested in bidding
for PHP
Most certainly hope this never happens.

[goliard] 23/3/2012 08:00

The majority of the fall is more likely those taking the scrip dividend selling a balancing number of shares at above the scrip price. It is a clever thing to do as they effectively get a larger dividend.

[ygor705] 23/3/2012 07:30

Probably the MMs adjusting their book........not aware of anything negative in the press of late. Late March also tends to be CGT sale time which can act as a drag on a share.

[dgwinterbottom] 22/3/2012 09:19

Any ideas please as to the recent volatility. We had a peak of just over 340p recently before it sinks all the way back to its recent norm of about 317p. is it people buying for the dividend and then selling?

[ygor705] 13/3/2012 22:43

The one thing that surprises me about PHP is that despite all the progress that it's made over the years and its very modest management requirements none of the bigger property or insurance companies has made a move for them. Its business formula is so rock solid that I can't see that situation lasting forever.

[ygor705] 07/3/2012 21:05

Losos..............yes thats's exactly what I mean but its not as easy as it sounds. Big deals cost money to put together and covenants can also be a problem. The loan market is just like any other market with good deals sometimes being available and at other times not. I suspect that PHP is viewed as a very reliable covenant in the loan market.........almost triple A if it is managed correctly. Insurance companies are desperate for good quality fixed return investments - hence the Aviva deal. Hope that this helps.

See that we went ex the 9.25p divi today which probably explains the drop.