Primary Health Properties’ share price is trading at new all-time highs following strong interim results that were reported on 28 July. The company reported 4.5% growth in net rental income year-on-year, and 5.1% growth in the dividend. PHP remains on track for 6.2p of dividends for the full year 2021, which will represent 25 years of consecutive dividend increases. We present our latest financial forecasts for PHP in detail on p2-4.
The company’s progress reflects continued positive rent reviews (1.5% increase for the first half), more than 99% successful collection of rents due to a tenant base that is 90% government-backed, and the impact of ongoing investments in the property portfolio. The PHP property portfolio now consists of 514 primary healthcare facilities in the UK and Ireland.
Profitability for 2021 also benefits from the internalisation of the Nexus management structure, which reduces PHP’s cost ratio to 9.0%, the lowest of any UK real estate investment trust. The internalisation of asset management also provides a simpler decision-making process and secures the continuity of the management team.
We argue that the operating environment for PHP remains favourable going forward. In particular, the Health & Care bill currently progressing through the UK parliament will underline the government’s commitment to ‘Integrated Care Systems’ which will mean more activities being conducted in the primary care (GP surgery) environment — diagnostics, minor operations, treatments. This aims to relieve pressure on hospitals, and we believe that this government strategy supports continued investment in primary healthcare infrastructure in spite of the increased use of video conferencing for basic GP consultations.
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