Primary Health Properties is a long-term investor in primary healthcare property in the UK and the Republic of Ireland. Assets are mainly long-let to GPs and the NHS or the HSE, organisations backed by the UK and Irish governments, respectively.
The now completed all-share merger with MedicX brings together two high quality portfolios, creating the leading primary healthcare investor in the UK and Ireland. Our earnings and DPS forecasts immediately benefit from cost efficiencies, while the combination of two high-quality portfolios creates a scale platform, well placed to profitably address the substantial investment needs of the primary healthcare sectors in both countries. The targeted near-term cost savings are highly deliverable and the increased scale of the group offers further strong potential in the medium term. This includes enhanced access to funding, both debt and equity, leaving PHP well positioned for further profitable growth. Not included in our forecasts, a significant medium-term refinancing opportunity exists as the larger group benefits from improved borrowing terms. Our FY19e EPRA EPS and DPS are increased with further strong growth forecast for FY20–21. After merger-related costs, our FY19e EPRA NAV per share growth reduces slightly.
Healthcare planning, with broad political support, suggests strong underlying demand for modern healthcare properties in both the UK and the Republic of Ireland. In addition to providing investment opportunities, this seems likely to support rental growth.