Primary Health Properties — Strong earnings growth and strategic progress

Primary Health Properties (LSE: PHP)

Last close As at 21/08/2026

GBP0.96

1.00 (1.05%)

Market capitalisation

GBP2,501m

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Research: Real Estate

Primary Health Properties — Strong earnings growth and strategic progress

Primary Health Properties (PHP) has reported H126 results showing strong earnings growth, supported by the successful combination with Assura and underlying portfolio progress. Adjusted EPS increased 9% to 3.8p, comfortably covering DPS of 3.65p (+3%). PHP is now well into its 30th consecutive year of DPS growth. 92% of the expected £9m Assura cost synergies have been put in place and plans are well advanced to reduce post-transaction leverage back to within the targeted range. Significantly, PHP has now agreed exclusive terms for the establishment of a 50/50 private hospital joint venture (JV) with a global long-term institutional investor.

Written by

Martyn King

Director, Financials. Property and Insurance

Real estate

H126 results

30 July 2026

Price 96.70p
Market cap £2,510m

Net cash/(debt) as at 30 June 2026

£3,422.0m

Shares in issue

2,595.1m
Code PHP
Primary exchange LSE
Secondary exchange JSE
Price Performance

Business description

Primary Health Properties is a long-term investor in critical healthcare infrastructure 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.

Analyst

Martyn King
+44 (0)20 3077 5700

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

Notes: Earnings and EPS are shown on PHP’s adjusted basis, which is EPRA earnings excluding the amortisation of mark-to-market adjustments for fixed-rate debt acquired. NAV per share is on an EPRA NTA basis, having previously been shown on an adjusted EPRA NTA basis.

Year end Net rental income (£m) Earnings (£m) EPS (p) NAV/share (£) DPS (p) Yield (%) P/NAV (x)
12/24 154.0 93.0 6.96 1.03 6.90 7.1 0.94
12/25 230.0 131.0 7.31 0.99 7.10 7.3 0.98
12/26e 314.5 191.0 7.36 1.02 7.30 7.5 0.95
12/27e 304.4 193.9 7.47 1.04 7.50 7.8 0.93

While the Assura acquisition is delivering the expected financial and strategic benefits, it is the continuing organic growth of rental income that will sustain long-term performance. Annualised rent roll increased by £3m to £345m during the period, with rent reviews (at an average 3.2% per year) and asset management adding £4m, partly offset by disposals. New asset management and development projects are starting to see rents being rebased upwards, making them economically viable, highlighting the reversionary potential in the portfolio and providing crucial evidence for future rent review settlements.

Tight cost control allows more of this rental growth to drop through to earnings, and while not all the achieved annual cost synergies have yet appeared in the income statement, the EPRA cost ratio has fallen to 8.7%, one of the lowest in the sector.

PHP has clear plans in place to reduce the higher gearing assumed for the Assura acquisition and move the loan-to-value (LTV) ratio of 57% back towards the target range of 40–50%. The agreed further transfer of assets to the existing primary care JV is expected to release £82m of cash. More significantly, it is expected that PHP will seed the proposed new JV with £0.7bn of private hospital assets. PHP is expected to retain a 50% interest in the JV and will earn fees as the asset manager. Due diligence is well advanced and on track for summer completion. In aggregate, we expect the transfer of assets to the JVs to release c £450m of cash and, on a pro-forma basis, PHP expects LTV to fall to c 53%. Meanwhile, PHP’s balance sheet remains robust, with significant liquidity headroom, and the company has been active in the financing market. £1.2bn of new unsecured debt facilities were completed in the period to enhance the group’s capital structure and reduce cost of capital, with credit margins 40bp cheaper than the facilities being replaced.

With portfolio net initial yield broadly stable at 5.4%, rental growth and asset management generated a revaluation surplus and IFRS NAV per share increased 1% to 99p. We will review the financial report in detail but expect no change to our EPS, DPS or EPRA NTA forecasts despite changes to the earnings composition.

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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.

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