Primary Health Properties (LON:PHP), the real estate investor that specialises in modern, purpose built primary healthcare facilities, has agreed a deal to buy Health Investments Ltd (HI), a provider of primary care and pharmacy properties with a UK wide portfolio. PHP is paying £11.7m in cash and shares for the business, with the share element representing around £2.9m of the full total. It is also taking on approximately £28.1m of debt.

HI owns 14 primary care properties with an appraised value of £39m. The current rent roll equates to £2.4m, reflecting a net initial yield of 6.1%. PHP said the portfolio is of a high quality and is 100% let to General Practitioners, Primary Care Trusts, NHS bodies and pharmacy operators with the weighted average lease length being in excess of 19 years. Rental income is derived 91% from the NHS with the remainder from strong covenant pharmacy operators. The properties are located primarily in the south east of England.

Harry Hyman, PHP’s managing director, said: “This is an important acquisition for PHP which adds significant assets to complement our existing properties and increases our total portfolio size by more than ten per cent. The properties boost our portfolio in gross asset terms and further demonstrates our commitment to the strategy of enlarging our asset base rapidly through a series of targeted acquisitions.”

PHP said the acquisition was significant in that it adds a high quality well-let portfolio to its existing asset base and reflects the fact that the group is able to acquire premium assets at favourable valuations in the current economic climate. The deal follows the acquisition of a new medical centre in Oswestry, Shropshire for £8.8m at the end of May and a new medical centre in Allesley Park, Coventry, for £2.82m at the end of April. Prior to those deals and since December 31, 2009, PHP acquired £45.2m of let standing investments. In April, the company said that demand for modern primary care facilities remained high and was underpinned by the Government's multi-billion pound commitment over the medium term to renewing primary care stock and ensuring that primary care is delivered from modern purpose built accommodation that is fit for purpose.

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