Primary Health Properties Share Discussion Threads

[bernardhy] 16/10/2013 20:21

The share price drop has led me to look into the accounts.

Income is growing. The damage has been done to profits by property revaluation and finance costs.

It seems that the Apollo purchase has been a problem. Hopefully it will turn out ok in the long run. More worrying are the profits after financing costs. Surely this is just the normal business of PHP. My questions are: why have the 2012 figures at this stage of the accounts deteriorated so much and why will they recover?

I'm no accountant and mostly take into consideration other factors. However looking at the company report the figures in the accounts do look at odds with the cheery tones of the commentary.

[goliard] 04/10/2013 11:34

Hi Stevie, I do get the REIT point, but they are currently paying well over 100% of taxable income out as a dividend. If they cut it to 90% it would be a very large decrease in dividend and associated yield.

I think the board has been more concerned about keeping their record of increasing the dividend each year, than they have about doing the right thing. If they do have to cut the dividend then income investors may sell up. it is just a false yield at the moment as they raise capital and then pay some of it straight back as a dividend.

Just to finish my rant about paying dividends out of capital, I think that there should be a rule that companies who pay dividends from capital should have to report it separately as a "Return of Capital Dividend" and dividends from profits should be paid separately as "Profits Dividends". It really is misleading to investors to not differentiate between the two.

[gostevie63] 04/10/2013 10:07

Hi goliard,

I believe that as a REIT, the company is required to distribute at least 90% of its taxable income to investors so they are a bit limited as to how much they can cut the dividend.

[goliard] 04/10/2013 09:38

It just feels like they are coming unstuck a bit after many years of being the market leader with a sound investment policy. They really need to cut the dividend, but the board is obviously scared that there will be a lot of selling if they do that. I see the possible downside here to be about 10-20% below NAV, so potentially 230p, or a bit lower. If that does happen then all those dividends over the years will be pretty much wiped out.

[westcountryboy] 19/9/2013 07:58

It all depends on perspective I guess, as for me this is one of the most boring shares in my portfolio. It's been in a gently rising channel since 2009, and all the while we collect our dividends. The rest is noise. So I don't watch it very keenly!

[bscuit] 18/9/2013 23:48

Well the drop is greater than the dividend on a slightly lower day--disconcerting. The share needs to be watched. Price has been yo-yoing a lot recently.

[bscuit] 18/9/2013 23:48

Well the drop is greater than the dividend on a slightly lower day--disconcerting. The share needs to be watched. Price has been yo-yoing a lot recently.

[3800] 18/9/2013 21:02

thanks for that Nil desperandum. I thought there must be something dire I had missed.
3800

[nil desperandum] 18/9/2013 20:28

went XD today

[3800] 18/9/2013 19:38

By paying out more in dividend than it recieved in rent mctmct.
I haven't seen any news to justify todays price drop has there been a sell recomendation anywhere?
3800

[mctmct] 18/9/2013 17:31

Can someone remind me how PHP got into the situation of having an uncovered dividend?

[stupidboypike] 23/8/2013 11:06

par, Been watching these for ages. My main worry is that around half of that 5.55 is not being earned by the company and so is in effect a return of capital. It is a bet on whether they can increase earnings to cover dividend. They may well but on the other hand ...

Best regards SBP

[par555] 23/8/2013 09:21

The dividend yield on these is currently 5.55%.Held in an ISA by a higher rate tax payer that's equivalent to a gross interest rate of 9.16%. Can't see interest rates matching that in the foreseeable future.

[goliard] 22/8/2013 21:45

ygor, I agree re timing, but not on impact. As cash rates rise there is no need to take any risk on holding property at low yields. Once rates rise the only hope for PHP and similar stocks is an increase in rent reviews. Just my opinion of course.

[sammy_smith] 22/8/2013 16:59

LISTEN: Primary Health Properties - Half yearly report

Click the link below to listen

[ygor706] 22/8/2013 15:27

Goliard.........I would not concern yourself too much about a rise in interest rates. Firstly it won't happen for a good while yet and secondly I cannot see it impacting PHP terribly much. A big chunk of their debt is fixed and term (hence the early downturn in eps whilst the money is being invested) and the rest will be protected by interest rate swaps. Provided the nhs keeps coughing up it's all down to management in my view.

[goliard] 22/8/2013 15:02

I agree with all of that. I do however think that as rates rise the attractiveness of this yield will reduce and the share price will also move lower. Perfectly good to hold for now, but personally I wouldn't be a buyer and would look to exit in the medium term if I were.

[ygor706] 22/8/2013 14:20

From an operational point of view, I believe that the basics of this business are fairly predictable. As with all property companies PHP's oxygen supply is the availability of cheap finance and this it seems to have in abundance. Dividend cover is an issue but the solution is to gear the balance sheet further in order to leverage a higher eps. This process cannot be completed overnight and the call here is to whether you believe that Harry and his very small team are good enough to pull that off. The company's track record speaks for itself and I would not be writing here unless I thought that they could. Today's report clearly states that the effect of new acquisitions should start to show through in the next set of numbers. I'm not expecting complete coverage of the dividend at that stage but I would expect the company's strategy to start coming through by that point.

[goliard] 22/8/2013 11:40

Because they pay out more than they make in profit! It is irrelevant that they are a REIT.

[daveofdevon] 22/8/2013 11:05

PHP is a REIT and the legislation requires that 90% of income must be distributed. Bearing that in mind how can dividend cover every be an issue ?

[mctmct] 22/8/2013 09:23

Any views on today's report and the dividend cover?

[old crow] 23/6/2013 11:53

goliard

Here's an example for you, some time i did a review on buying
some Co-operative 5.5% PIBS ending 2015 and bought a few after reading
an analyst who said the Co-op would buy them back at 100 on maturity
my mind said dont think so reckon will lose money on capital,
so sold out at 83.7 and made a profit of £1,800.
Now the selling price is 36.2 so had I listened to the so called expert
would have made a big loss

When it comes to trusting the Crow anyone does me a favour and i say, will make it right with you, I never fail to pay

The Crows also holding AGR
and are waiting and hoping AMS will fall so to buy in.

Cheers

[goliard] 23/6/2013 10:34

Good job I wasn't asking for your trust then. You can value an opinion, or even respect it (or the opposite). Buy you only trust people, not opinions. Maybe that's what you are saying.

[old crow] 23/6/2013 08:45

What the Crows say is including my own, never trust other peoples opinions