Primary Health Properties — Stability with income growth

Primary Health Properties (LSE: PHP)

Last close As at 22/05/2024

GBP0.93

−1.45 (−1.53%)

Market capitalisation

GBP1,247m

More on this equity

Research: Real Estate

Primary Health Properties — Stability with income growth

The key feature of Primary Health Properties’ (PHP’s) 2023 results was the further acceleration in rental uplifts, rising at the fastest pace for 15 years. This is driving organic earnings growth to fully cover progressive dividends, which are now in the 28th year of unbroken increase.

Martyn King

Written by

Martyn King

Director, Financials

Real Estate

Primary Health Properties

Stability with income growth

2023 results

Real estate

5 March 2024

Price

90p

Market cap

£1,203m

Net debt (£m) at 31 December 2023

1,306

Net LTV at 31 December 2023

47.0%

Shares in issue

1,336.5m

Free float

97.4%

Code

PHP

Primary exchange

LSE

Secondary exchange

JSE

Share price performance

%

1m

3m

12m

Abs

(3.4)

(9.0)

(14.5)

Rel (local)

(3.8)

(11.0)

(11.2)

52-week high/low

107p

86p

Business description

Primary Health Properties is a long-term investor in primary healthcare property in the UK and the Republic of Ireland. Assets are mainly let on long leases to GPs and the NHS or HSE, organisations backed by the UK and Irish governments, respectively. The tenant profile and long average lease duration provide an exceptionally secure rental income stream.

Next event

Half-year 2024

30 June 2024

Analyst

Martyn King

+44 (0)20 3077 5700

Primary Health Properties is a research client of Edison Investment Research Limited

The key feature of Primary Health Properties’ (PHP’s) 2023 results was the further acceleration in rental uplifts, rising at the fastest pace for 15 years. This is driving organic earnings growth to fully cover progressive dividends, which are now in the 28th year of unbroken increase.

Year end

Net rental income (£m)

Adjusted earnings* (£m)

Adjusted EPS** (p)

NAV per share*** (p)

DPS
(p)

P/NAV
(x)

Yield
(%)

12/22

141.5

88.7

6.6

112.6

6.50

0.81

7.1

12/23

151.0

90.7

6.8

108.0

6.70

0.84

7.4

12/24e

154.3

92.4

6.9

107.1

6.90

0.84

7.7

12/25e

157.9

93.3

7.0

109.4

7.00

0.82

7.8

Note: *Excludes valuation movements, amortisation of fair value adjustment to acquired debt and other exceptional items. **Non-diluted. ***Defined as adjusted EPRA net tangible assets (NTA) excluding fair value of derivative interest rate contracts and convertible bond, deferred tax and fair value adjustment on acquired debt.

Driven by accelerating rental growth

Open market rent reviews (67% of the total) continue to accelerate and should maintain rental growth as inflation softens. Combined with one of the lowest cost ratios in the sector and 97% of debt costs fixed/hedged, this should drive further fully covered DPS growth. This assumes no benefit from acquisitions, which should look more attractive as interest rates fall and rents increase. For the new developments needed to modernise healthcare estates to be viable, the rents need to increase 20–30%, but PHP sees some signs of this being recognised by commissioners. 2023 DPS of 6.70p (+3.1%) was 1.01x covered by adjusted EPS and the Q124 DPS of 1.725p indicates a 2024 DPS of 6.9p. More robust than the wider property sector, a 23bp yield widening (to 5.05%) was partly offset by rental growth. NAV per share was 4.1% lower at 108p but NAV total return was 1.8%. Our income earnings forecasts show no material change.

Well-placed to meet health service investment needs

The long-term need for primary healthcare facilities is driven by demographic trends and is relatively unaffected by economic conditions. In both the UK and Ireland, populations are growing and ageing, with more complex healthcare needs. Increased use of online and telephone appointments, particularly for frontline triage, has done nothing to reduce the need for modern, integrated, local primary healthcare facilities. Not only will these better serve patients with an extended range of procedures, available locally, they will reduce pressures on the hospitals and support the NHS to reduce the treatment backlog. PHP is well-placed to help meet this need for investment and signals that it will remain the focus of its strategy.

Valuation: Secure and growing income

Visible, secure and growing income is the core of the PHP investment case. Leases are long and substantially upward-only, 89% backed directly or indirectly by government bodies, with little exposure to the economic cycle or fluctuations in occupancy. The rise in interest rates has driven up the prospective dividend yield to more than 7% despite accelerating rent growth, underpinning the prospects for further growth in income and dividends. The 10-year UK gilt yield is 4.1%.

Rental growth drove the increase in earnings and supported property values

Rental uplifts have reached the highest level in 15 years

During 2023, rental uplifts were the main driver of the c £5.5m, or 3.8%, increase in annualised contracted rent roll to £150.8m. Rent reviews added £4.0m and asset management projects a further £0.3m,1 and management expects the increase in rental growth to continue in 2024.

  1 The other increase in rent roll represents the balance of acquisition (£1.6m) net of lease surrenders and expiries, and FX movements.

Exhibit 1: Rental growth is continuing to accelerate*

Source: PHP data. Note: *Average annualised uplift on completed UK rent reviews.

UK rent reviews are typically on a three-year revolving basis and effectively upward only, at the option of the landlord. Irish rents (c 9% of the total) are linked to Irish CPI and are reviewed every five years. Recent inflation is yet to fully feed through the UK three-year review cycle, but the acceleration of open market reviews should offset the eventual slowdown. After many years of very modest uplifts, high levels of land and building cost inflation, particularly in the past couple of years, are increasingly being recognised.

Exhibit 2: Annualised rental uplifts on completed rent reviews in the period

2023

2022

2021

2020

UK – open market

1.8%

1.5%

1.5%

1.3%

UK – indexed

8.4%

7.4%

2.8%

2.3%

UK – fixed

2.7%

3.1%

2.9%

2.7%

Total UK

4.0%

3.4%

1.7%

1.8%

Ireland – indexed

3.3%

2.6%

0.8%

1.1%

Total annualised increase

4.0%

3.4%

1.7%

1.8%

Source: PHP

Property valuations were robust

The 2023 property revaluation deficit of £53.0m, or 4.0p per share, was driven by a 23 basis point (0.23%) widening of the EPRA net initial yield to 5.05%, with the impact substantially mitigated by rental growth and asset management. Yield widening reduced values by c £128m with rental growth and asset management having a positive impact of c £75m.

Due to its defensive nature, healthcare property valuations have been more robust than the broader sector during the re-pricing of assets in the past two years. For PHP in particular, 89% of rental income is paid by the UK and Irish governments, occupancy is effectively full (99.3%) and the weighted average unexpired lease length is more than 10 years.

With inflation falling significantly and money markets anticipating that interest rates have peaked and will soon begin to fall, PHP is hopeful that valuation declines with continuing rental growth offsetting any further modest widening of yields.

Highly selective investment stance

PHP’s cautious approach to investment activity continued in 2023, waiting for the economic and interest rate environment to become clearer, and where it can proceed on an accretive basis. It made just one acquisition, late in 2023, and has just one development project on site. The Croft Primary Care Centre in West Sussex, being built to net zero carbon standards, is expected to reach practical completion in Q324.

The immediate pipeline of external investment opportunities includes one development project where it has managed to work with both the local council and integrated care board (ICB)2 to make the scheme economically viable. More generally, PHP estimates that to compensate for much higher costs, to make new development economically viable and bring forward schemes that are much needed by the NHS, agreed rents need to be 20–30% higher.

  2 An integrated care board (or ICB) is a statutory NHS organisation that is responsible for developing a plan for meeting the health needs of the population, managing the NHS budget and arranging for the provision of health services in a geographical area.

Ireland remains PHP’s preferred area of future investment activity, with similar market dynamics to the UK from a lower cost of capital and higher property yields. Over the medium term, the company targets an increase in the Irish share of the portfolio from the current 9% to c 15%, for which the January 2023 acquisition of Axis will provide meaningful support.

Asset management projects create value by increasing rents and extending lease lengths. The 2023 initiatives will increase rental income by £0.3m pa and will extend the lease to more than 15 years, for an investment of £5.2m. A further 23 asset management projects and lease regears are planned over the next two years, with £19.3m of investment to create additional rental income of £0.8m pa and extend the average unexpired lease term to back over 20 years.

Exhibit 3: Summary of investment pipeline

In legals

Advanced pipeline

Total cost

Number

Est cost

Number

Est cost

Ireland – forward funding

2

£43.3m/c €50m

£43.3m/c €50m

UK direct developments

1

£3.3m

2

£11.5m

£14.8m

UK investments

Total external investment

1

£3.3m

4

£54.8m

£58.1m

UK asset management projects

23

£19.3m

20

£16.3m

£35.6m

Source: PHP

2023 results

Adjusted earnings increased by £2.0m or 2.3% during the year, with strong growth in net rental income (up £7.8m) and a first-time contribution from Axis (£1.1m) partly offset by higher administrative and interest costs (up £2.0m and £4.9m, respectively).

The increase in net rental income included £4.6m of additional income from completed rent reviews and asset management projects (including the impact of rent reviews backdated to the original date of review), a £2.5m impact from acquisitions, disposals and developments completed in 2023 and 2022 and a £0.7m reduction in non-recoverable property costs.

The £2.0m increase in administration costs was mainly due to a £1.1m increase in the provision for performance-related pay and the cost of a voluntary redundancy programme, which PHP expects to reduce costs by c £0.5m pa. The 2022 comparative benefited from a one-off adjustment to historical performance fee arrangements.

The EPRA cost ratio of 10.7% remains one of the lowest in the UK REIT sector.

Increased net financing expense primarily reflects increased average debt and the impact of higher interest rates on the small amount of floating rate debt.

In addition to the 4.0p per share property valuation deficit, intangible assets of 0.5p per share acquired with Axis are excluded from adjusted EPRA net tangible assets (NTA) per share, 4.6p lower at 108p.

Exhibit 4: Summary of earnings 2023

£m unless stated otherwise

2023

2022

2023/2022

Net rental income

149.3

141.5

5.5%

Axis contribution

1.1

0.0

Administrative expenses

(11.6)

(9.6)

20.8%

Net finance expense

(48.1)

(43.2)

11.3%

Adjusted EPRA earnings*

90.7

88.7

2.3%

Amortisation of fair value adjustment on acquired debt

3.0

2.9

EPRA earnings

93.7

91.6

2.3%

Property revaluation

(53.0)

(64.4)

Profit on sale of properties

0.0

2.9

Fair value gain/(loss) on interest rate derivative & convertible bond

(13.2)

26.8

Amortisation of Axis intangible

(0.9)

Axis acquisition costs

(0.5)

Deferred tax charge

1.2

(0.6)

Basic IFRS earnings

27.3

56.3

Basic IFRS EPS (p)

2.0

4.2

Basic EPRA EPS (p)

7.0

6.9

Basic adjusted EPRA EPS (p)

6.8

6.6

2.2%

DPS (p)

6.70

6.50

3.1%

Dividend cover** (x)

1.01

1.02

Adjusted EPRA NAV per share (p)***

108.0

112.6

EPRA NAV total return

1.8%

2.0%

Investment portfolio (bn)

2.78

2.80

Portfolio net initial yield (NIY)

5.05%

4.82%

Net LTV

47.0%

45.1%

EPRA cost ratio

10.7%

9.9%

Source: PHP data, Edison Investment Research. Note: *Adjusted EPRA earnings excludes valuation movements, amortisation of acquired fixed rate debt revaluation and other exceptional items. **Dividend cover is EPRA earnings as a percentage of dividends declared. ***Adjusted EPRA NAV excludes fair value movements in derivative interest rate contracts and convertible bonds, acquired fixed rate debt revaluation and deferred tax.

Strong balance sheet

PHP has a strong balance sheet. Debt facilities are well spread by lending source and maturity, with an average maturity of more than six years. Of the drawn debt, 97% is fixed rate or hedged, with an average rate of 3.3%. Allowing for capital commitments, it has more than £300m of undrawn headroom.

The net loan to value ratio of 47.0% is within the company’s target range of 40–50%. Although above the LTV range for more mainstream listed UK commercial property investors, this should be seen in the context of the exceptional strength of the tenant covenant, the essential nature of the assets and long leases with upwards-only3 rent reviews. Net debt/EBITDA is more than 9x. It would take a 39% decline in portfolio value, or an implied 8.0% net initial yield, to challenge covenant headroom. Rightly in our view, PHP has reiterated its comfort with its balance sheet structure and, for the avoidance of doubt, confirmed that it has no plans to reduce borrowing by raising equity.

3 It is possible for Irish rents to be negatively indexed to inflation but this seems a remote prospect.

Minimal change to earnings forecasts

There is no material change to our 2024 earnings forecast and we expect further progress in earnings and fully covered DPS in 2025 (+1.4%), driven by organic rental growth.

Our forecasts had not allowed for market-wide property yield expansion in H223 and our forecast EPRA NTA per share is consequently lower.

Exhibit 5: Forecast summary

Revised forecast

Previous forecast

Change

2023

2024e

2025e

2024e

2025e

2024

2025

Net rental & related income (£m)

151.0

154.3

157.9

155.7

N/A

-0.9%

N/A

Adjusted earnings (£m)

90.7

92.4

93.3

91.9

N/A

0.5%

N/A

Adjusted EPS (p)

6.8

6.9

7.0

6.9

N/A

0.4%

N/A

DPS (p)

6.7

6.9

7.0

6.9

N/A

0.0%

N/A

Dividend cover (x)

1.01

1.00

1.00

1.00

N/A

0.4%

N/A

Adjusted EPRA NTA per share (p)

108.0

107.1

109.4

111.6

N/A

-4.0%

N/A

LTV

47.0%

47.8%

47.6%

45.6%

Source: PHP 2023 data, Edison Investment Research forecasts

Progressive, fully covered DPS

PHP is already in its 28th year of unbroken DPS growth and we expect further increases in FY24 and FY25, fully covered by adjusted earnings. The expected 2024 DPS of 6.9p represents a 3.0% increase on 2023 and would take five-year growth to 4.4% pa.

Exhibit 6: Now in the 28th year of unbroken dividend growth

Source: PHP data

Stable and growing dividends are central to the PHP investment case, although secure, upwards-only rental growth supports capital growth over time. Over 10 years, PHP has consistently generated income returns (on NTA), with an average of 5.6% pa (and 6.0% in 2023). NTA per share has also increased over the same period, by an average 3.5% pa.

Exhibit 7: 10-year income and capital returns

Source: PHP data, Edison Investment Research

Exhibit 8: Financial summary

Year end 31 December (£m)

2021

2022

2023

2024e

2025e

PROFIT & LOSS

Net property income

136.7

141.5

151.0

154.3

157.9

Administrative expenses

(10.5)

(9.6)

(13.7)

(12.7)

(13.0)

Operating profit before revaluation movements and non-recurring items

126.2

131.9

137.3

141.6

144.9

Net realised and unrealised portfolio gains/(losses)

110.5

(61.5)

(53.0)

(16.9)

31.8

Exceptional items related to corporate acquisition

(37.0)

0.0

0.0

0.0

0.0

Operating profit before financing costs

199.7

70.4

84.3

124.7

176.6

Finance income

0.8

0.9

0.2

0.0

0.0

Finance expense

(60.5)

(41.2)

(45.2)

(47.2)

(49.5)

Fair value movement on swaps and convertible bond

1.6

26.8

(13.2)

0.0

0.0

Profit Before Tax

141.6

56.9

26.1

77.5

127.1

Tax

(1.5)

(0.6)

1.2

0.0

0.0

Profit After Tax

140.1

56.3

27.3

77.5

127.1

Adjusted for the following:

Net realised/unrealised gain/(loss) on investment property

(110.5)

61.5

53.0

16.9

(31.8)

Fair value gain/(loss) on derivatives & convertible bond

(1.6)

(26.8)

13.2

0.0

0.0

Other adjustments

26.1

0.6

0.2

1.0

1.0

EPRA earnings

62.1

91.6

93.7

95.4

96.3

Other non-recurring charges

29.0

0.0

0.0

0.0

0.0

Amortisation of fair value adjustment to acquired debt

(3.2)

(2.9)

(3.0)

(3.0)

(3.0)

Other adjustments

(4.7)

0.0

0.0

0.0

0.0

Adjusted earnings

83.2

88.7

90.7

92.4

93.3

Period end number of shares (m)

1,332.9

1,336.5

1,336.5

1,336.5

1,336.5

Average Number of Shares Outstanding (m)

1,330.4

1,334.8

1,335.7

1,336.5

1,336.5

Fully diluted average number of shares outstanding (m)

1,435.8

1,443.7

1,444.6

1,445.4

1,445.4

Basic IFRS EPS (p)

10.5

4.2

2.0

5.8

9.5

Adjusted EPS (p)

6.2

6.6

6.8

6.9

7.0

Dividend per share (p)

6.20

6.50

6.70

6.90

7.00

Dividend cover (Adjusted earnings/dividends paid)

101%

102%

101%

100%

100%

Adjusted EPRA NTA total return

8.9%

2.0%

1.8%

5.6%

8.7%

EPRA cost ratio

9.3%

9.9%

10.7%

10.7%

10.6%

BALANCE SHEET

Non-current assets

2,801.4

2,816.3

2,786.9

2,786.1

2,826.9

Investment properties

2,795.9

2,796.3

2,779.3

2,777.4

2,819.2

Other non-current assets

5.5

20.0

7.6

8.7

7.7

Current Assets

51.7

48.2

40.0

45.7

43.1

Cash & equivalents

33.4

29.1

3.2

8.9

6.3

Other current assets

18.3

19.1

36.8

36.8

36.8

Current Liabilities

(70.5)

(64.1)

(71.2)

(68.8)

(68.8)

Current borrowing

(2.2)

(2.3)

(2.4)

0.0

0.0

Other current liabilities

(68.3)

(61.8)

(68.8)

(68.8)

(68.8)

Non-current liabilities

(1,282.7)

(1,318.2)

(1,331.8)

(1,353.8)

(1,358.4)

Non-current borrowings

(1,273.0)

(1,297.1)

(1,320.9)

(1,342.9)

(1,347.5)

Other non-current liabilities

(9.7)

(21.1)

(10.9)

(10.9)

(10.9)

Net Assets

1,499.9

1,482.2

1,423.9

1,409.2

1,442.7

Derivative interest rate swaps

(4.4)

(7.1)

(4.7)

(4.7)

(4.7)

Change in fair value of convertible bond

21.6

(7.1)

(2.3)

(2.3)

(2.3)

Other EPRA adjustments

38.8

36.8

26.1

29.2

26.2

Adjusted EPRA net tangible assets (NTA)

1,555.9

1,504.8

1,443.0

1,431.4

1,461.9

IFRS NAV per share (p)

112.5

110.9

106.5

105.4

107.9

Adjusted EPRA NTA per share (p)

116.7

112.6

108.0

107.1

109.4

CASH FLOW

Operating Cash Flow

140.4

117.6

133.6

142.6

145.9

Net Interest & other financing charges

(46.6)

(42.4)

(47.1)

(47.6)

(49.9)

Tax

0.0

0.0

0.0

0.0

0.0

Acquisitions/disposals

(129.3)

(74.8)

(39.5)

(15.0)

(10.0)

Net proceeds from issue of shares

(0.1)

(0.1)

0.0

0.0

0.0

Debt drawn/(repaid)

82.8

48.8

23.6

20.0

5.0

Equity dividends paid (net of scrip)

(74.4)

(81.6)

(89.5)

(92.2)

(93.6)

Other cash movements and FX

(43.6)

28.9

(7.0)

(2.1)

0.0

Net change in cash

(70.2)

(4.3)

(25.9)

5.7

(2.6)

Opening cash & equivalents

103.6

33.4

29.1

3.2

8.9

Closing net cash & equivalents

33.4

29.1

3.2

8.9

6.3

Debt as per balance sheet

(1,275.2)

(1,299.4)

(1,323.3)

(1,342.9)

(1,347.5)

Convertible bond fair value adjustment

21.6

(7.1)

(2.3)

(2.3)

(2.3)

Unamortised borrowing costs

(13.7)

(15.3)

(12.7)

(10.1)

(7.5)

Fair value of acquired debt

34.4

31.4

28.4

25.4

22.4

Closing net debt/(cash)

(1,199.5)

(1,261.3)

(1,306.7)

(1,321.0)

(1,328.6)

Net LTV

42.9%

45.1%

47.0%

47.8%

47.6%

Source: PHP historical data, Edison Investment Research forecasts


General disclaimer and copyright

This report has been commissioned by Primary Health Properties and prepared and issued by Edison, in consideration of a fee payable by Primary Health Properties. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Primary Health Properties and prepared and issued by Edison, in consideration of a fee payable by Primary Health Properties. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Primary Health Properties

View All

Latest from the Real Estate sector

View All Real Estate content

Research: TMT

EML Payments — Looking to a brighter future

EML Payments reported good growth in revenue and underlying EBITDA in H124, mainly due to the benefit of higher interest income. Management’s focus has been on the underperforming PCSIL General Purpose Reloadable (GPR) business, now in liquidation, resulting in the cost cutting programme shifting to H224. With that obstacle removed, management can now shift its sights to growing the remaining Gifting and GPR businesses and rightsizing the cost base.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free