REG - Primary Health Props - Trading update & notice of interim dividend

Primary Health PropertiesAnnouncement

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RNS Number : 5889O  Primary Health Properties PLC  13 January 2026

13 January 2026

 

Primary Health Properties PLC

("PHP", the "Group" or the "Company")

Trading update & notice of interim dividend

Company's 30(th) anniversary of consecutive dividend growth

Primary Health Properties PLC, the UK's leading investor in modern primary
healthcare facilities, today publishes a trading update for the year ended 31
December 2025 and announces the first 2026 quarterly interim dividend of 1.825
pence per ordinary share, equivalent to 7.3 pence (2025: 7.1 pence) on an
annualised basis, marking the Company's 30(th) anniversary of consecutive
dividend growth.

Highlights

·    Transformational combination between PHP and Assura successfully
delivered, creating a £6 billion healthcare REIT

·    60% of total annualised synergies of £9 million, identified at time
of the deal, already delivered in the c. 2 months since Competition and
Markets Authority ("CMA") clearance, as integration moves forward at pace and
benefits of the deal are delivered for shareholders

·    Rent reviews in the year generated an additional £8.3 million, an
increase of 6.8% over the previous passing rent or 3.2% on an annualised
basis, which supports our positive rental growth outlook. Annualised
contracted rent roll now stands at £342 million

·    Enlarged Group is now well placed to take advantage of the improving
rental growth outlook across primary care and private hospitals, with six
developments on site and an advanced pipeline of 51 asset management projects

·    Good progress is being made on expanding the existing joint ventures
and establishing a strategic joint venture for our private hospital portfolio
where we see exciting growth opportunities

·    Strong support from the debt and credit markets for the combination
with the refinancing of Assura debt facilities, subject to change of control
clauses, now completed providing the enlarged Group with significant undrawn
liquidity headroom, after capital commitments, of £552 million, a weighted
average cost of debt of 3.7% and debt maturities of just over four years

Mark Davies, CEO of PHP, commented:

"2025 was a transformational year for PHP, obtaining overwhelming shareholder
and wider stakeholder support for the combination with Assura plc ("Assura")
to create a £6 billion healthcare REIT invested in critical social
infrastructure across the UK and Ireland which will deliver financial and
strategic benefits to our stakeholders. Our immediate focus is now on
delivering the post-transaction objectives of reducing leverage back to our
targeted range of 40% to 50%; delivering the £9 million of annualised
synergies identified; and integrating the two businesses to achieve the best
of both organisations.

"We are delighted to be reporting that, despite only two months since CMA
clearance on 29 October 2025, we have made good progress on delivering against
the above objectives and we expect to report further progress with the Group's
full year results.

"The NHS's 10-year Health Plan published in July 2025 is clearly positive for
PHP. We welcome the Government's commitment to strengthening the NHS,
particularly its emphasis on shifting more services to modern primary care
facilities embedded in local communities, enhanced by the NHS Neighbourhood
Rebuild programme announced in the Autumn Budget. This plays directly to our
strengths and long-standing partnerships across the NHS give us a strong
foundation to support this transition and deliver value to our shareholders.

"We have now achieved PHP's 30-year anniversary of consecutive dividend growth
and approach the future with a dedicated determination to continue growing our
dividend on a fully covered basis. We are encouraged by the improving rental
growth outlook underpinned by the Group's primary care assets along with the
solid trading performance from the recently acquired private hospital
portfolio."

Combination with Assura

The acquisition of Assura was completed in full on 20 October 2025 when the
final 2% of Assura shares were legally acquired and Phase 1 clearance from the
CMA was received on 29 October 2025 which enabled integration of the two
businesses to commence.

In the short space of time since CMA clearance, we have made strong progress
and delivered annualised cost synergies totalling £5.4 million or 60% of the
target, which has been achieved primarily through a reduction in people costs
and elimination of duplicated professional fees.

The fair value of the total consideration paid for the acquisition of Assura
was just over £1.6 billion funded through the issue of 1.26 billion new
ordinary shares of 12.5 pence each, at a weighted average price of 93.0 pence
per share, equivalent to £1,171 million, cash consideration of £407 million
and transaction costs including stamp duty of £42 million.

Strategy and financial framework

The transaction has created a UK REIT of significant scale and liquidity with
a combined portfolio of approximately £6 billion of long leased, sustainable
infrastructure assets principally let to government tenants and leading UK
healthcare providers benefiting from increased income security, longevity,
diversity of assets, geography and mix of rent review types.

To support the combined Group's progressive dividend policy, paid on a
quarterly basis, we have set out our strategy and financial framework which
will focus on:

·    80% to 90% government backed income target with new or regeared
leases typically in excess of 20 years

·    Organic rental growth greater than 3% to deliver sector leading, risk
adjusted total property returns

·    Risk controlled and capital light asset management and development
projects

·    Targeting a strong investment grade credit rating of BBB+ or better

·    LTV target of 40% to 50%

·    Net debt : EBITDA target of less than 9.5x

·    Interest cover target of greater than 2.5x net rental income with
more than 90% of debt fixed or hedged

·    Strong control on costs and overheads with one of the lowest EPRA
cost ratios in the sector at below 10%

Joint ventures and disposals

A full portfolio review is currently ongoing and as previously reported we aim
to establish new strategic joint ventures and deliver further disposals to
achieve our goal to reduce leverage back to our targeted range of 40-50%.

We continue to make good progress regarding opportunities for both existing
joint ventures within primary care real estate and with several highly
credible counterparties regarding options for a potential joint venture for
the private hospital portfolio. We are excited about the prospect of
continuing to build joint ventures of size and scale which will bring
financial benefits to all parties while supporting investment in critical
healthcare infrastructure and generating positive social impact across the UK.

Following completion of the combination with Assura the enlarged Group has
sold four non-core assets for £8.3 million.

Robust portfolio metrics

The security and longevity of our income are important drivers of our secure,
long term predictable income stream and enable our progressive dividend
policy.

The annualised contracted rent roll of the Group's enlarged portfolio at 31
December 2025 was £342 million and the key portfolio metrics are summarised
in the table at Appendix 1.

Rental growth

The enlarged Group's sector-leading metrics remain robust and we continue to
focus on delivering the organic rental growth that can be derived from our
existing assets. This growth arises mainly from rent reviews and asset
management projects (extensions, refurbishments and lease re-gears). These
initiatives provide an important opportunity to increase income, extend lease
terms and avoid obsolescence whilst ensuring that our properties continue to
meet their communities' healthcare needs, improve their ESG credentials and
ensure they also play a crucial role in helping the Government fulfil its
10-year Health Plan.

In the year ended 31 December 2025, both the PHP and Assura portfolios have
continued to see strong organic rental growth on a like-for like basis with
total income increasing by £9.1 million or 2.7% (PHP: £4.1 million or 2.6%;
Assura: £5.0 million or 2.8%) continuing the improving rental growth outlook
seen over recent years.

Rent review performance

In the year ended 31 December 2025, the enlarged Group generated an
additional £8.3 million of extra rental income from its rent review
activities, both in the UK and in Ireland.

Importantly, the Company continues to see an improving open market rent review
performance for primary care assets with an additional £2.7 million an
increase of 6.5% over the previous passing rent completed across 324 reviews.

The growth from rent reviews completed by both PHP and Assura in 2025 is
summarised below:

 Review type                          Number  Previous rent  Rent increase  Increase      total        Increase annualised

                        (per annum)    (per annum)    %                         %

                        £ million      £ million
 Primary care - open market(1)        324     42.0           2.7            6.5%                      2.1%
 Primary care - indexed               249     33.2           3.1            9.4%                      4.6%
 Primary care - fixed                 47      7.9            0.4            4.8%                      2.1%
 Primary care - total                 620     83.1           6.2            7.5%                      3.1%
 Private hospitals - indexed / fixed  20      34.1           1.1            3.2%                      3.2%
 UK - total                           640     117.2          7.3            6.2%                      3.1%
 Ireland - indexed                    25      4.7            1.0            20.9%                     4.1%
 Total - all reviews                  665     121.9          8.3            6.8%                      3.2%

(1) - includes 36 reviews where no uplift was achieved.

(1) - includes 36 reviews where no uplift was achieved.

Asset management performance

The Group continues to progress an advanced pipeline of 51 projects across the
enlarged Group which highlight the improving rental growth outlook with the
current weighted average rent of £189 psm due to increase by around 15% to
£218 psm post completion. These projects provide important evidence for
future rent review settlements across the wider portfolio.

In the UK, across both the PHP and Assura portfolios we exchanged on eight new
asset management projects, 21 lease re-gears and 20 new lettings during the
year. These initiatives will increase rental income by £0.8 million,
investing £5.0 million and extending the leases back to an average of 17
years for the asset management projects.

The Company will continue to invest capital in a range of physical extensions
or refurbishments through asset management projects which help avoid
obsolescence, including improving energy efficiency, and which are key to
maintaining the longevity and security of our income through long-term
occupier retention, increased rental income and extended occupational lease
terms, adding to both earnings and capital values.

Development

During the year, PHP completed two net zero carbon developments at Croft, West
Sussex and South Kilburn, London. Assura completed three schemes in 2025
including a net zero carbon development of an NHS children's therapy centre at
Fareham, Hampshire, a GP medical centre development in Winchester, Hampshire
and a primary care centre in Ballybay, Ireland.

The enlarged Group has an improved development capability at a time the sector
needs new buildings and is currently on site with six developments which are
summarised in the table below:

                                         Est. practical completion  Total               Cost to             Yield on

                                                                    cost                complete            cost
 Birr primary care centre, Ireland       Q2 2026                    £13.0m (€15.0m)     £2.9m (€3.3m)       5.1%
 Castlebar primary care centre, Ireland  Q4 2026                    £13.6m (€15.7m)     £6.3m (€7.2m)       5.3%
 Youghal primary care centre, Ireland    Q1 2027                    £13.9m (€16.0m)     £10.5m (€12.0m)     4.6%
 Private hospital, Peterborough          Q1 2027                    £20.8m              £17.2m              6.1%
 Tetbury Primary Care Centre             Q4 2026                    £1.0m(1)            £0.8m(1)            5.5%
 Weston-super-Mare PCC                   Q3 2027                    £2.3m(1)            £1.8m(1)            5.1%
 Total                                                              £64.6m              £39.5m              5.4%

(1) - Joint ventures at share

We continue to monitor a number of potential development opportunities with a
pipeline across primary care in both the UK and Ireland and private hospitals.
These will only be progressed if accretive to earnings and they deliver the
appropriate risk adjusted returns.

Financing

We received strong support for the combination with Assura from the debt and
credit markets highlighted by the record amount of financing activity in the
year including:

·    The transaction was funded by way of a new £1.225 billion unsecured
bridging loan provided by Citibank, N.A., London Branch, Lloyds Bank plc and
The Royal Bank of Scotland Plc. We have subsequently cancelled £225 million
of this facility due to the refinancing work noted below with £1.0 billion of
the facility now remaining

·    Change of control waivers obtained plus term extensions to the
unsecured Assura £266 million term-loan and £200 million revolving credit
facility

·    £357 million of Assura private placement debt, subject to change of
control clauses, has been refinanced since completion of the acquisition,
through a combination of a new unsecured euro denominated private placement
debt and re-couponing of an existing unsecured loan note, as follows:

o  A new €120 million (£105 million) private placement loan, maturing in
November 2032, has been issued at an all-in fixed rate of 3.89% providing a
natural currency hedge for the Assura Irish property portfolio and the Laya
Healthcare Facility, Cork acquired for €22 million in February 2025

o  £60 million tranche maturing October 2034 has been refinanced and
re-couponed at an all-in rate of 5.60%

o  The balance of the private placement debt, including £70 million that
matured in October 2025, has been repaid from the bridging facility put in
place to finance the acquisition of Assura

·    Total debt facilities at 31 December 2025 of £4.0 billion comprising
£1.5 billion (37%) of PHP secured facilities and £2.5 billion (63%) of
unsecured facilities including the bridging loan provided to finance the
combination with Assura

·    Net debt drawn at 31 December 2025 of £3.4 billion, with an average
weighted maturity of just over four years, providing significant liquidity
headroom with cash and collateralised undrawn loan facilities totalling £552
million after capital commitments of £56 million across the development and
asset management projects currently on site.

·    Weighted average interest rate of 3.7% at 31 December 2025

·    Fitch confirmed Assura's credit rating as BBB+ (negative outlook)
from A- following completion of the merger reflecting the execution risk of
the planned asset disposals

Notice of interim dividend

The Company announces the first quarterly interim dividend in 2026 of 1.825
pence per ordinary share, equivalent to 7.3 pence on an annualised basis,
which represents an increase of 2.8% over the dividend per share distributed
in 2025 of 7.1 pence and will mark the 30(th) year of consecutive dividend
growth for PHP.

The 1.825 pence dividend will be paid by way of a Property Income Distribution
("PID") of 1.325 pence and an ordinary dividend of 0.500 pence on 13 March
2026 to shareholders on the register on 30 January 2026.

The Company intends to maintain its strategy of paying a progressive dividend,
paid in equal quarterly instalments, that is covered by adjusted earnings
in each financial year. Further dividend payments are planned to be made on a
quarterly basis in May, August and November 2026 which are expected to
comprise a mixture of both PID and normal dividend.

The Company also confirms that shareholders may participate in a dividend
reinvestment plan ("DRIP") in respect of the current interim dividend and any
future dividends. The DRIP is provided by Equiniti Financial Services Limited
("Equiniti FS") and administered by PHP's registrars, Equiniti Limited
("Equiniti"), and provides shareholders with the opportunity to reinvest
dividend payments to purchase additional ordinary shares in PHP in the
market.

Shareholders who hold their ordinary shares in certificated form and who wish
to participate in the DRIP will need to ensure that a completed DRIP
Application Form is received by Equiniti no later than 5:00pm on 20 February
2026 (the "Election Date").  Shareholders who hold their ordinary shares in
CREST and who wish to participate in the DRIP must do so by submitting an
election by CREST input message by the Election Date.

The key dates for the dividend are detailed in the timetable below:

 Timetable
 Ex-dividend date                                                            29 January 2026
 Record date                                                                 30 January 2026
 Latest date for receipt by Equiniti of DRIP Application Forms and input of  5.00 p.m. on 20 February 2026
 CREST elections
 Dividend payment date/CREST credit date                                     13 March 2026
 Estimated DRIP purchase date                                                13 March 2026
 DRIP shares credited/certificates posted                                    18 March 2026

A separate announcement with additional information concerning shares held on
the Johannesburg Stock Exchange has been published via the SENS system.

Board changes

As previously reported, Jonathan Davies was appointed as an independent
Non-executive Director effective from 1 December 2025. Jonathan brings a deep
understanding of Assura, having served as its Senior Independent Director and,
latterly, Chair providing the Company's stakeholders with continuity during
the integration period and beyond.

Jonathan Murphy, Jayne Cottam and the other non-executive directors of Assura
have left the business.

Appointment of Shore Capital as broker

The Company has appointed Shore Capital as corporate broker acting alongside
existing brokers Deutsche Numis and Peel Hunt. JP Morgan Cazenove are no
longer a retained broker.

Analyst webcast and conference call:

A live webcast and conference call facility for analysts will be held today,
at 10.00am (12.00pm SAST) via.

Webcast:  https://brrmedia.news/PHP_TU (https://brrmedia.news/PHP_TU)

Telephone: +44 (0) 33 0551 0200 / quote PHP if prompted by the operator.

If you would like to register your interest in attending the meeting, please
contact Sodali & Co at PHP@client.sodali.com
(mailto:PHP@client.sodali.com) .

 

 

 

Appendix 1 - Key portfolio metrics

                      Primary care  Primary care  Private     Joint ventures(1) / other  Total

                      UK            Ireland       hospitals
 Number of assets     1,059         28            33          22                         1,142
 Value (approx.)      £4.9bn        £0.3bn        £0.7bn      £0.1bn                     £6.0bn
 Rent roll (£m)       275.0         20.1          44.1        2.7                        341.9
 WAULT (years)        8.4           16.1          22.0        19.5                       11.0
 Review type
 OMV                  75%           2%            2%          6%                         60%
 Indexed              20%           97%           87%         73%                        34%
 Fixed                5%            1%            11%         21%                        6%
 Total                100%          100%          100%        100%                       100%
 Covenant type
 GP / Government      87%           90%           -           95%                        76%
 Pharmacy             9%            6%            -           4%                         7%
 Nuffield             -             -             38%         -                          5%
 Circle               -             -             16%         -                          2%
 Spire                -             -             14%         -                          2%
 Ramsay               -             -             13%         -                          2%
 Genesis              -             -             7%          -                          1%
 HCA                  -             -             5%          -                          1%
 PPG                  -             -             3%          -                          0%
 Laya (Ireland)       -             -             3%          -                          0%
 Other                4%            4%            1%          1%                         4%
 Total                100%          100%          100%        100%                       100%
 Income expiry
 Holding over (£m)    15.8          -             -           -                          15.8
 < 3 years (£m)       41.5          -             0.4         -                          41.9
 4 - 5 years (£m)     45.0          -             0.4         -                          45.4
 5 - 10 years (£m)    80.9          -             0.5         0.1                        81.5
 10 - 15 years (£m)   47.7          4.5           3.3         0.9                        56.4
 15 - 20 years (£m)   29.5          8.6           2.8         0.6                        41.5
 20 - 25 years (£m)   12.1          5.2           18.3        0.4                        36.0
 > 25 years (£m)      2.5           1.8           18.4        0.7                        23.4
 Total (£m)           275.0         20.1          44.1        2.7                        341.9

(1) - Joint ventures at share

- Ends -

 

For more information, please contact:

 PHP                                 Via Sodali & Co

 Mark Davies, CEO

 Richard Howell, CFO

 David Purcell, Investor Relations
 Sodali & Co                         Email: PHP@client.sodali.com (mailto:PHP@client.sodali.com)

 Elly Williamson                     Tel: +44 (0)207 250 1446

 Louisa Henry

 Saskia Bottomley

 

Further information is available at www.phpgroup.co.uk
(http://www.phpgroup.co.uk)

 

 

Primary Health Properties PLC LEI code: 213800Y5CJHXOATK7X11

 

 

 

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