Primary Health Properties' rental income rises, showcasing robust growth

Primary Health Properties (PHP), a leading investor in modern primary care facilities in the UK and Ireland, in a trading update released on Monday said improving rental growth and stabilisation in yields underpin valuation growth.

For the six months to 30 June net rental income rose 3.1% to £78.6 million (R1.9 billion) with adjusted earnings per share up 2.3% to 3.54 pence. Dividends declared were 3.55 pence up 2.9%.

PHP said it had continued to focus on delivering organic rental growth derived from its existing assets. This growth arises mainly from rent reviews and asset management projects with income increasing by £2.2m, or 1.4%, in the six-month period. The company generated an additional £2.1m of extra rental income from its rent review activities, both in the UK and in Ireland.

The group said it continues to progress an advanced pipeline of 43 projects, which highlight the improving rental growth outlook with the current weighted average rent of £195psm (pounds per square meter) due to increase by around 15% to £223psm post completion.

As at June 30, 2025, the group's portfolio comprised 517 assets independently valued at £2.81 billion. After allowing for acquisition costs and capital expenditure on developments and asset management projects, the portfolio generated a valuation surplus of £19.8m.

PHP, which is secondary listed on the JSE, said it is excited about the compelling market backdrop for the group and opportunities ahead.

Mark Davies, the CEO of PHP, said, "At a

pivotal time for our sector, 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. 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 said the British Government's 10 year Health Plan, which was published last week is clearly positive for PHP. PHP welcomes the government's commitment to strengthening the National Health Service, particularly its emphasis on shifting more services to modern primary care facilities embedded in local communities.

"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," Davies said.

On the takeover bid, he said PHP continues to believe in the compelling strategic and financial rationale for the recommended combination with Assura plc.

"The transaction is expected to be earnings accretive for both sets of shareholders and we were pleased to have secured strong support for the transaction from PHP shareholders at our general meeting last week with over 99% of voting shareholders approving the proposed combination," Davies said. "This is a clear endorsement of the company's ability to deliver a financially beneficial transaction that is strategically valuable, supported by an expected strong investment grade credit rating that will deliver future value to shareholders and underpin the Group's progressive dividend policy."

Since the announcement of the Assura plc recommendation, PHP has been discussing forming a joint venture, which is expected to include the private hospital portfolio.

Davies said, "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. The proposed combination also positions us strongly to invest in the future of healthcare infrastructure and we will have the financial capacity and Government support to help deliver it."

The transaction will create 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.

BUSINESS REPORT