Primary Health Properties Share Discussion Threads

[chucko1] 05/7/2019 15:02

I sold the lot the past week. Not always at the best price, but it was fine nonetheless. I just do not like the premium here.

[1olddog] 05/7/2019 14:32

#835 You called it right chucko. What now?

[gbh2] 21/6/2019 20:23

The days of pump seem to be over may well be time to dump!

[pixelrobox] 21/6/2019 12:29

Financial Times does (or did) an annual random pin-sticking exercise compared to fund managers. Don't recall exact results but was sometimes better than the average.

[1olddog] 21/6/2019 12:22

Not a bad starting point epo. Maybe you could give a chap called Woodford some tips lol.

[epo001] 20/6/2019 09:15

Can I just say I am finding this discussion very illuminating though it makes me feel like a pin-sticking amateur, ("ooh, health care, that's good, NHS always pay their bills").

[pixelrobox] 19/6/2019 23:34

JGH03
Thx, I hoped you were wrong for several reasons but cant escape that logic or maths. I re-checked your figures just to be sure.

I rechecked MedicX last quarterly nav

-

which confirm the above epra nav, but on second look show NNAV of 72.4p compared to 81p giving a notably higher post merger premium to NAV of around 23% (16.3p)

I wonder if the NNNAV adjusted to include the fair value of (i) financial instruments, (ii) debt and (iii) deferred taxes is the correct figure to use.

Even so it does not reconcile well with your figures. Perhaps a decline in MedicX nav in the intervening period based on diligence, or merger costs?
Anyway, thx for the correction.

[pixelrobox] 19/6/2019 22:55

1olddog
Run has been exceptional. I do not recall php prem/nav being this high, having held since 2008. I would not draw much reassurance from my analysis however, I am a poor investor, I mentioned adding to my holding for sake of disclosure.

The shift seems to be sector(al)though, some property sub sectors doing well (last mile logistics, flex work space) and others (out of town/retail) doing badly.
PHP might be benefiting on a premium being placed on perceived rent roll security, analysts often allude to quasi'bond-like' characteristics, so maybe not a coincidence that since January the share price has spiked in tandem with CB's interest rate rises being delayed/reversed, bond yields dropping. Cant see what operationally has changed despite the merger, rents are hardly on fire and last set of results were fine, if rather pedestrian. Attraction for me has been the consistency of delivery and long term strategic premise.

[jgh03] 19/6/2019 22:45

The portfolio update of 6 June stated that the book value of the properties was £2,316m, and that net debt was £1,115m (both as at 31 March, post merger with MedicX).

Number of shares at 15 March (post merger) was 1,131,235,006. So that would mean NAV per share is 106.17p. However that excludes the recent 1.4p dividend and shares issued as part of the scrip dividend. Maybe its easiest just to subtract 1.4p to arrive at a NAV of 104.77p.

Today's share price is 133p, which is 26.9% above NAV. This excludes the convertible bond. However, it looks rather higher than pixelrobox's estimate, so maybe I've missed something.

[pixelrobox] 19/6/2019 22:30

Any views vs Assura? Looks v comparable on many metrics.

[1olddog] 19/6/2019 22:00

Thanks pixel robot. I get nervous if the premium to NAV gets too high, and we have had a good run lately. I have topped up when share price fell on bond offering. Your analysis gives me some reassurance.Cheers.

[pixelrobox] 19/6/2019 20:33

1olddog
In March premium (based on Jan results)was roughly 21% (php) when shares were at 128p (NAV of 105p roughly), probably not much has changed given steady incremental changes to NAV flagged (portfolio valuation (+2.5%) though share price is a little higher.
Post merger and making some assumptions based on MedicX NAV of 81p (as of Dec 2018)and (88,7p) or 7p merger premium, (as between Dec and March we don't know exactly what happened to NAV).
Based on the lower premium to NAV but lower weighting of MedicX in combined entity (roughly 30/70) I guess that resulting premium to nav is reduced and, based on historical last nav, is roughly 18-19%.
The convertible is rather beyond me also, though lowering borrowing cost % sounds positive, dilution is part and parcel of reits to a degree.
I added to my small holding, results have been consistent for long enough for some confidence.

[1olddog] 19/6/2019 08:48

What do the financially literate on here think the premium to NAV is now, after merger with MedicX, share dilution, and partial debt repayment? Grateful for educated estimate.

[perfect choice] 18/6/2019 18:10

Also if raising £150M and repaying £75M 5.375% senior unsecured bonds due in 2019, that leaves £75M for further acquisitions(share value enhancing), unless I've missed something?

[chucko1] 18/6/2019 18:00

About a 10% share “dilution̶1; with an option delta of circa 30% (in my head), so 3% on an expected basis. Shares ended lower by a little more than this amount, and also bear in mind the £16.5mm total interest saving over the term of the convertible, being about 1% of current MV. Better refinancing costs in the price, irrespective of the issue, so perhaps this 1% is optimistic.

In all, share price should be 2-3% lower in the short term, but slightly higher long term.

But I don’t think all convert buyers will delta hedge their bonds, so I suspect this will drift back close to the share price of yesterday in a shortish while, ceteris paribus. I bought a bunch because of that.

[perfect choice] 18/6/2019 17:23

RNS update after closing, exchange price set at 153.25p as stated - "The initial exchange price has been set at 153.25 pence, a premium of 15% above the volume weighted average price of a Share on 18 June 2019 being 133.26 pence"

Also reduces the enlarged group's average cost of finance to 3.8% following repayment of the 5.375% senior unsecured bond at the end of July 2019.

[rik shaw] 18/6/2019 13:18

1 to 4 share split took place in Nov 15.

[perfect choice] 18/6/2019 11:48

Ah well spotted, didn't look at the time so no impact on buyers from yesterday except a bit of bad timing, but expect price to regain to yesterday's level in due course.

epo001 - pretty sure PHP have stated their dividend plans for this year and current dividend is certainly retained for rest of this year. Analysts also predict increase of the dividend in future years, take a look at latest reports at hxxps://www.phpgroup.co.uk/news-and-media/research-notes

[bscuit] 18/6/2019 11:24

The RNS was 2after hours"

[epo001] 18/6/2019 10:56

Has this year's dividend been declared yet? The first 2 were 1.4, is it safe to assume the next 2 will also be 1.4?

Also on dividend questions, why did the divi drop from around 10p pa in 2015 to around 5p in 2016? The yield didn't change so was it some form of share split?

[perfect choice] 18/6/2019 10:55

Well I missed even seeing the RNS yesterday as busy, have taken advantage of the drop today and may buy more this afternoon but just seeing which way price goes across the day or is it now at a floor around 131p.

Interesting to see the text below states PHP keep control of how the bonds are converted with the company deciding if they wish to convert to shares or cash and allowing the exchange price to be adjusted in certain circumstances.

RNS Extract:

Under the terms of the Bonds, the Company will have the right to elect to settle exercise of any conversion rights entirely in Shares or cash, or with a combination of Shares and cash. The exchange price will be subject to adjustment in certain circumstances

[norland1] 18/6/2019 10:41

Thanks PC I must admit that I only skipped over the RNS. The end bit went over my head anyway. The premium I thought about was the share price relative to the NAV which looked high when I saw an item in The Property Chronicle. (freebie version of course )

Share price doesn't particularily worry me as I have changed from BTL to this investment -less hassle- but never thought about BTL valuation anyway so not going to worry about this share price.

I understand the position when shareholders are asked to fork more cash which affects the share price but this Bond issue is much more complicated.

[1olddog] 18/6/2019 09:56

Well the RNS is dated 17/06. Seems a complicated way to go about the fund raising, but good top up opportunity for the small buyers as PC says, IMO.