Is it time to take the tonic before someone else does?
AH Medical Properties (PLUS:AHMP), an investor in the modern doctors’ surgeries and medical centres that we have all seen springing up around us, has just received its second bid approach in six months.
Not surprising, because among a tiny band of listed companies in its sector, AHMP’s share rating has lagged considerably behind, despite that it has been growing the fastest, and owns properties whose valuations have beaten its peers, in a sector of the property market that has proved far more resilient than any other and is sought after by institutional investors.
AHMP has caught its MRSA-like bug in the PLUS market - where, with hindsight perhaps, a strategic mistake by its parent, AIM listed Ashley House Plc (LON:ASH) , left it as a separate company listed on Plus when it moved itself up to AIM. It is a moribund PLUS, coupled with a lack of research coverage leading to a 20% undervaluation of its shares compared with its peers, that has pushed AHMP onto the ambulance chasers’ radar and not any intrinsic lack of health. In fact its rapid profits growth, having slowed recently, is due to resume this year. And with dividends growing much the fastest, the prospective yield two years out- on our estimates - is more than 8%.
AHMP’s market is sought after because the properties it invests in are precisely those that the NHS – backed by all political parties - has been strongly encouraging in order to move health provision closer to the patient (via cheaper Primary Care) and away from expensive Secondary (hospital) Care. As a result, a strong industry has developed to design and build the necessary surgeries, pharmacies, and health centres, which are then financed by the likes of AHMP and leased to GP’s. Because their rents are backed by the NHS, which agrees where they are built, the sector has no voids, and no risk of the tenant failures that caused the 2008 crash in other commercial properties – which are still a long way from full recovery.
By contrast, the small, specialised, medical properties sector, according to valuers’ data base IPD experienced only 1/5th of the drop in other commercial property values in 2008, and in 2009 outperformed even the latter’s sharp recovery (which has now stalled). And within that index,…
