Primary Health Properties PLC

Adjusted earnings increased to GBP 98 million, including a full 6-month contribution from Assura that added GBP 50 million of income. Adjusted EPS rose 9% to 3.8p, and the projected 2026 dividend is 7.3p and fully covered. Like-for-like rental growth added GBP 4 million of income, with settled reviews up 6% on previous passing rent, or 3.2% annualized; open-market reviews were up 6.3%. The portfolio produced a GBP 18 million valuation surplus, offset by GBP 11 million from 1 basis point of yield expansion, while adjusted NTA was unchanged at 104p per share and the portfolio value was GBP 6 billion. EPRA cost ratio improved to 8.7% from around 10%, and the average cost of debt was 3.8%, expected to fall to 3.5% in the second half once deleveraging is completed. PHP said GBP 1.2 billion of debt has been refinanced, leaving just under GBP 260 million outstanding, and there is GBP 300 million of undrawn liquidity headroom after capital commitments.

Mark Davies emphasized that the Assura merger is delivering on its strategic goals: integration is nearly complete, more than 90% of cost synergies have been realized, and the balance sheet repair plan is on track. He highlighted the private hospitals JV as both a long-term strategic partnership and a deleveraging step, while also pointing to growing opportunities in primary care and neighborhood health centers. His tone was confident and upbeat, stressing that the business has strong structural demand, secure cash flows and a 30-year dividend growth record.

Richard Howell focused on the financial translation of the merger, pointing to adjusted earnings of GBP 98 million, EPS of 3.8p and an EPRA cost ratio of 8.7% after delivering GBP 8 million, or 92%, of the planned GBP 9 million cost synergies. He said the portfolio remains well supported by 99% occupancy, a 10-year WAULT and 76% government-backed income, and that the group’s valuation was stable at GBP 6 billion with adjusted NTA of 104p. On financing, he noted GBP 1.2 billion of refinancing completed, just under GBP 260 million still outstanding, average debt cost at 3.8% and expected to move to 3.5% in H2, with GBP 300 million of liquidity headroom.

Analysts focused on leverage, the path to an investment-grade rating, and whether asset sales could still be done near NAV despite a higher cost of capital. Management said Fitch looks more at net debt-to-EBITDA than LTV, though the company still targets below 50% LTV over time, and it expressed confidence in the value of assets going into the JVs, while stopping short of quoting exact disposal prices before closing. Questions also covered whether more cost savings are still available, and management said further savings should come in H2, especially from property costs and the internalization of Assura facilities management. Another question asked how competitive the JV partner process was; management said it kept the process tight, received approaches from credible counterparties and is now in exclusive advanced discussions with a global long-term investor.