Primary Health Properties reports strong half as it works towards Assura merger
By Josh White
Date: Thursday 24 Jul 2025
(Sharecast News) - Primary Health Properties (PHP) reported a strong interim performance for the six months ended 30 June on Thursday, with higher earnings, portfolio valuation gains and a growing rent roll, supported by improving conditions across the UK and Irish primary care real estate sector.
Adjusted earnings rose 2.2% to £47.3m, while adjusted earnings per share increased 2.3% to 3.54p.
IFRS profit for the period surged to £59.4m from £3.6m a year earlier, driven by valuation gains on the group's property portfolio and derivatives.
Dividends paid in the period totalled £47.4m, up 2.8%, with dividend cover maintained at 100%.
Net rental income grew 3.1% to £78.6m, and contracted annualised rent rose 2.5% to £157.7m.
PHP recorded like-for-like rental uplifts of £2.2m, or 1.4%, through rent reviews and asset management projects.
"PHP has delivered a strong operational and financial performance driven by rental growth across our portfolio, a value-accretive acquisition in Ireland, valuation gains and another period of dividend growth," said chief executive officer Mark Davies.
"The improving rental growth outlook and a stabilisation of our property yields at 5.25% signal that we've moved through a key inflexion point in the property cycle with a very encouraging outlook ahead."
Davies also welcomed the UK government's recently published 10-year Health Plan, noting that its emphasis on shifting more services into community-based primary care aligned with PHP's strategy and portfolio.
"This plays directly to our strengths and our long-standing partnerships across the NHS give us a strong foundation to support this transition and deliver value to our shareholders," he said.
PHP's investment portfolio increased in value by 0.7% to £2.81bn, supported by £28.8m of revaluation gains from rental growth and asset management activity.
The net initial yield on the portfolio stabilised at 5.25%.
Occupancy remained high at 99.1%, and 88% of rent was funded by government bodies, while the weighted average unexpired lease term was 9.1 years.
The group completed a €22m (£18.2m) acquisition of a Laya Healthcare facility in Cork, Ireland, delivering a 7.1% earnings yield.
PHP said its Irish portfolio now totalled 22 assets worth £293m, accounting for 10% of the overall portfolio.
The company said Ireland remained a core area of strategic growth.
PHP reiterated its commitment to the proposed all-share merger with Assura, which received overwhelming shareholder support in July.
The deal was expected to be earnings accretive and enhance the group's credit profile and dividend capacity.
"From day one the combined group will offer a powerful platform with greater scale, enhanced income and valuation growth potential and a lower cost of capital, all underpinned by a clear and important social purpose," Davies said.
The group said it was also in ongoing talks with third-party investors to form a joint venture involving its private hospital assets, which it expected to help reduce leverage following the Assura combination.
PHP maintained a loan-to-value ratio of 48.6%, within its targeted 40% to 50% range, with all debt fixed or hedged and an average debt maturity of 5.1 years.
The group had £107.3m of available liquidity at the end of the period, following the post-period repayment of a £150m convertible bond.
PHP confirmed its intention to maintain its progressive, covered dividend policy, with three quarterly dividends declared year-to-date equating to 7.1p per share on an annualised basis, a 2.9% increase on 2024.
It marked PHP's 29th consecutive year of dividend growth.
At 1009 BST, shares in Primary Health Properties were up 0.04% at 95.64p.
Reporting by Josh White for Sharecast.com.
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