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Highlights:

  • PHP reports a 1.4% rental income increase and valuation surplus of GBP 19.8 million in H1FY25
  • Primary Health Properties (PHP) shareholders approve Assura combination with 99.3% vote
  • PHP declares 3.55p interim dividend, marking 29 consecutive years of dividend growth

Primary Health Properties PLC (LSE:PHP), a UK and Ireland-focused healthcare real estate investment trust (REIT), released its unaudited trading update for the six months ending 30 June 2025. The report outlines progress on rental growth, valuation trends, dividend payments, and updates on its proposed combination with Assura plc.

PHP reported rental income growth of GBP 2.2 million, up 1.4% during the first half of 2025, supported by a continued recovery in rent reviews and asset management activity. Open market rent reviews completed in the period delivered a 7.6% increase over previous rent levels, while 37 reviews from 2022 to 2024 provided a 12.3% uplift, or 3.6% annually.

The company noted an active pipeline of 43 asset management projects, up from 37 at year-end 2024. The average rent on these projects is projected to rise from GBP 195 per sqm to GBP 223 per sqm post-completion, with implications for future rent benchmarks.

The total portfolio value rose to GBP 2.81 billion as of 30 June 2025, up from GBP 2.75 billion at year-end 2024. This reflected a valuation surplus of GBP 19.8 million, with the net initial yield (NIY) expanding by 3 basis points to 5.25%. Reversionary yield remained flat at 5.6%. These developments follow several years of downward valuation adjustments due to the higher interest rate environment.

PHP's portfolio comprised 517 assets across the UK and Ireland. In Ireland, the group acquired the Laya Healthcare facility in Cork for GBP 22 million, with an earnings yield of 7.1%. The Irish portfolio stood at GBP 292.6 million as of June 2025, across 22 fully let assets.

On 1 July 2025, PHP shareholders voted 99.3% in favour of the proposed combination with Assura plc. The transaction, announced on 16 May 2025 and revised on 23 June 2025, will be conducted through an enhanced share and cash offer. Assura shareholders will receive 0.3865 PHP shares and 12.5 pence in cash per Assura share, along with a special dividend.

The merged entity will form a REIT with approximately GBP 6 billion in healthcare assets, primarily backed by government tenants. The strategy includes maintaining 80–90% government-backed income, targeting over 3% organic rental growth, and managing capital within a 40–50% loan-to-value (LTV) range.

For the half-year period, PHP distributed a total dividend of 3.55 pence per share (equivalent to 7.1 pence annualised), representing a 2.9% increase from the prior year. This marked the company’s 29th consecutive year of dividend growth. A third interim dividend of 1.775 pence per share is scheduled for payment on 15 August 2025.

PHP’s balance sheet showed cash and undrawn facilities of GBP 107.3 million, down from GBP 270.9 million at the end of 2024, reflecting capital commitments and the upcoming repayment of a GBP 150 million convertible bond due 15 July 2025. Net debt increased to GBP 1.37 billion, while 90% of the debt remains fixed or hedged.

The update also references the UK Government’s newly published 10-year health plan for England, which promotes the shift of care from hospitals to community settings. The plan supports the development of "Neighbourhood Health Centres" integrating multiple services in local hubs, with private capital expected to play a role in delivery. PHP cited this policy shift as a relevant context for its asset and development strategy, although future development activity is currently limited pending rent negotiations with NHS-related bodies.