Material produced by Kepler Trust Intelligence should be considered as factual information only and not an indication as to the desirability or appropriateness of investing in the security discussed.
Please see the important information by following this link or at the bottom of the page.
Primary Health Properties (PHP) is a FTSE 250 REIT, aiming to deliver progressive returns for shareholders through a mixture of income and capital appreciation. It has recently announced an all-share merger with smaller rival fund MedicX.
The company invests in modern, purpose-built doctor’s surgery facilities that are let out on long leases across the UK and Ireland. Nexus, the managers of the trust, look for large scale projects, and as at the end of 2018, the average lot size across both the PHP and MedicX portfolios was £4.8m. The trust boasts strong fundamental attributes, including a weighted average unexpired lease term (WAULT) of 13.1 years and an occupancy rate of 99.8%. 90% of rents are government backed.
Over the past five years, we have seen PHP deliver strong returns, generating NAV returns of 111.7%. This is quadruple the IA open-ended direct property sector (27.8%), twenty times the FTSE All Share REIT index (5%), as well as double the Morningstar IT Property sector average (50%). The primary focus of the trust is the yield, and it aims to offer a growing level of income over time. Currently, the trust is yielding 4.8% and last year saw the trust deliver its 22nd year of dividend growth - now fully covered by earnings.
The merger with MedicX creates a portfolio of around 480 properties, worth a total of £2.3bn. As we explain in more detail in the portfolio section, the merger benefits both sets of shareholders, mainly due to the increase in scale of the combined business, and is expected to complete in late March.
PHP has largely traded at a consistent and significant premium to the published NAV. This reflects the strong and secure dividend yield, as well as the strong investor following that it has built up. It is worth noting that PHP employs significant gearing of 45%, based on a loan to value basis.
Kepler Trust Intelligence is a website owned and managed by Kepler Partners LLP. Material produced by Kepler Trust Intelligence should be considered a marketing communication, and is not independent research.
This report has been issued by Kepler Partners LLP for communication only to eligible counterparties and professional clients as defined by the Financial Conduct Authority. Its contents are not directed at, are not to be communicated to, may not be suitable for and must not be relied on by retail clients.
The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. Persons who access this information are required to inform themselves and to comply with any such restrictions.
The information contained herein has not been prepared in accordance with legal requirements designed to promote the independence of investment research. The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.
This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.
Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm’s internal rules.
Past performance is not necessarily a guide to the future. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. Independent financial advice should be taken before entering into any financial transaction. This website is published solely for informational purposes and has no regard to the specific investment objectives, financial situation or particular needs of any person.
PLEASE SEE ALSO OUR TERMS AND CONDITIONS
A copy of the firm’s conflict of interest policy is available on request.
Kepler Partners LLP is a limited liability partnership registered in England and Wales at 9/10 Savile Row, London W1S 3PF with registered number OC334771.
Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority.
These investment trusts don't fit into the usual boxes, which is exactly what makes them worthy of closer attention...
Chairman of International Biotechnology Trust, John Aston, explains how his unusual background in both biotechnology and banking come together on the trust...
Mid Wynd International Investment Trust's Sim Edelsten thinks not...
Three months in, we check up on the progress of our discount opportunities portfolio...