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Primary Health Properties

Strong 2017 with good growth prospects

Outlook | Property | 02 Mar 2018

2017 saw continuing growth in assets, earnings, NAV, dividends and dividend cover. EPRA NAV total return for the year was 16.4%. The prospects for further growth are good, with a strong pipeline of investment opportunities, a reduced LTV and average cost of debt, and substantial undrawn borrowing facilities. While yield tightening has benefited capital growth in recent years, it also increases the cost of acquisitions, and indications of accelerating rent growth are a positive development.

Primary Health Properties

Continuing to find acquisition opportunities

Update | Property | 18 Dec 2017

Primary Health Properties (PHP) has agreed the acquisition of a large and modern primary care facility in the Republic of Ireland (RoI), its third to date, at a cost of EUR 20m. Yields in the RoI remain noticeably ahead of those currently available in the UK despite some signs of competition. Acquisitions of c GBP 70m since end-H1, and a current contracted rent roll of just over GBP 73m, are in line with our forecasts for the year and sufficient to trigger investment adviser performance fees, now included in reported, but not underlying, earnings forecasts. Acquisitions, rent increases, and long and largely government-backed leases underpin PHP’s attractive, growing and fully covered dividend, which we expect to continue its 20-year growth trend.

Primary Health Properties

Ireland enhancing overall growth

Update | Property | 02 Nov 2018

Primary Health Properties (PHP) recently held a capital markets day in the Republic of Ireland (RoI), where it now has eight assets and looks for further strong growth, towards 10% of the overall portfolio. The RoI market shares similar drivers and attractive characteristics to the UK and currently benefits from higher yields and lower funding costs. The visit provided additional comfort to our forecasts for further income and dividend growth driven by asset acquisition in both the UK and RoI, an improving outlook for rental growth and more opportunities to optimise average borrowing costs.

Primary Health Properties

Asset and rental growth drive strong performance

Update | Property | 02 Aug 2018

Primary Health Properties (PHP) had a strong first half year with EPRA earnings growth benefiting from acquisitions made in 2017 and H118, supported by continued and increasing organic rental growth. Our forecasts for further growth are underpinned by a full period contribution from recent acquisitions, continued deployment of the proceeds of April’s equity issue into a strong pipeline of opportunities, an increasingly positive outlook for rental growth, and further opportunities to lower average borrowing costs.

Primary Health Properties

Funded for growth

Update | Property | 14 May 2018

With a successfully completed GBP 115m (gross) equity raise behind it, PHP is well funded for continuing growth in its investment portfolio, targeting returns that are supportive the progressive dividend policy, now in its 22nd year. The prospects for cash deployment look positive, with a c GBP 151m pipeline of investment prospects, of which more than a third are at a highly advanced stage of negotiation. Reduced gearing leaves Primary Health Properties (PHP) well placed to seize additional opportunities that may arise, with the NHS commissioning of primary healthcare investment finally showing signs of acceleration, and the Republic of Ireland (RoI) operation becoming established, with a fourth asset recently added.

Primary Health Properties

Strong progress in H1

Update | Property | 07 Aug 2017

H117 results for Primary Health Properties (PHP) show strong growth in underlying (EPRA) earnings, driven by higher rental income and lower financing costs. Amid strong competition for assets, PHP is continuing to source acquisitions that meet its criteria and reports a strong pipeline of opportunities. Long-term demographic trends and broad political will for healthcare reform continue to support the outlook for primary care property in both the UK and Ireland, and PHP’s long and largely government-backed leases underpin an attractive and fully covered dividend, which we expect to continue its 20-year growth trend.

Primary Health Properties

Steady long-term income

Update | Property | 16 May 2017

Primary Health Properties' (PHP) 26 April trading update demonstrated several positive developments in the year to date: continued portfolio and rental growth, new long-term financing, a revision of the advisory agreement with Nexus and a higher quarterly dividend (5.25p annualised vs 5.125p in FY16). Long-term demographic trends and broad political will for healthcare reform continue to support the outlook for primary care property in both the UK and Ireland, and PHP's long and largely government-backed leases underpin an attractive and fully covered dividend, which we expect to continue its 20-year growth trend.

Primary Health Properties

Long-term income

Update | Property | 27 Feb 2017

FY16 was Primary Health Properties' (PHP) 20th year of uninterrupted dividend growth and saw a return to full dividend cover. The capital increase in April 2016 (£145.3m net of costs) enabled management to reduce LTV, lower the cost of debt and continue to expand the portfolio of modern, purpose-built primary care assets on long leases mainly to government-backed tenants. The efficient operating model should deliver further reduction in the EPRA cost ratio in FY17 as the portfolio grows, increasing profitability and underpinning the secure dividend stream. The first quarterly dividend for FY17 of 1.31p has been declared, and we forecast continued, fully covered dividend growth to 5.25p per share in FY17 and 5.36p in FY18.

Primary Health Properties

Secure and growing income

Outlook | Property | 26 Aug 2016

The first half of FY16 saw Primary Health Properties (PHP) continuing to grow on all key metrics. The low-cost operating model should see ongoing portfolio growth translate into rising earnings and dividend paying capacity. Consensus is that PHP will pay 5.125p in earnings in FY16, which would be the 20th year of unbroken dividend growth. Our increased estimates indicate that dividends will remain fully covered despite an increased share count from the April capital increase. PHP offers an attractive, growing and secure dividend, supported by predictable long-term cash flows from mainly government-backed revenues.

Primary Health Properties

Operational gearing delivers dividend cover

Update | Property | 23 Feb 2016

Cost and funding efficiencies combined with continued asset growth have delivered strong earnings growth in 2015 for PHP. By the year end the progressive dividend was again fully covered (107% in H215 and 98% for the year). There is political and financial support for NHS planning that should soon see an acceleration of new development spending, with good prospects for long-term growth. Property yields have contracted but funding conditions remain strong, maintaining a healthy spread and opportunity for ongoing accretive growth. Meanwhile, PHP is making a limited entry into the Irish market where it can acquire at higher debt-adjusted yields.

Primary Health Properties

Accelerated dividend cover

Update | Property | 28 Aug 2015

The interim results showed strong profit growth with good operational gearing as a result of ongoing cost and funding efficiencies. Cover of the progressive dividend lifted to 89%. Our revised forecasts now show full cover in H2 of the current year, with a prospective yield of 4.9%. Following a conclusive election result, there is continuity of policy towards the NHS, providing political and financial support for its five-year plan. In this context, the prospects for continuing asset growth look good. Property yields have contracted but funding conditions remain strong, maintaining a healthy spread and opportunity for ongoing accretive growth.

Primary Health Properties

Asset growth on track

ADR Update | Property | 24 Apr 2015

A trading update to coincide with its AGM, covering the period from 1 January to 22 April 2015, confirms the group to be on track for the asset and profit growth we forecast following the FY14 results in March. We have made no changes to our underlying estimates. Primary Health Properties (PHP) provides growing dividends and an attractive 5.0% prospective yield. Cash flows are generated from a broad portfolio of government-backed healthcare facilities on long leases. Portfolio growth, lower funding costs and a lower expense ratio drove FY14 growth and we expect a full contribution from funding and expense benefits in 2015, while portfolio growth is ongoing. With profit growth, we expect full dividend cover by H216, despite a progressive dividend.