Primary Health Properties (PHP) Trading Update summary

Financial and operational performance

• Net rental income rose 3.1% to £78.6m, with adjusted earnings up 2.2% to £47.3m and IFRS profit at £59.4m for H1 2025.

• Dividend per share increased 2.9% to 3.55p, marking 29 years of consecutive growth, with 100% dividend cover maintained.

• Portfolio valuation grew 0.7% to £2.81bn, with a net initial yield of 5.25% and occupancy at 99.1%.

• Loan to value ratio stood at 48.6%, with average cost of debt at 3.4% and net debt/EBITDA at 9.4x.

• Total property return for H1 2025 was 3.6%, driven by income and capital return improvements.

Strategic developments and market outlook

• Strong rental growth and stabilising yields signal an inflexion point in the property cycle, supporting valuation growth.

• The UK Government's 10-year Health Plan prioritises investment in primary care, aligning with the group's strengths and growth strategy.

• The recommended combination with Assura plc received 99.3% shareholder approval, creating a £6bn REIT with enhanced scale and income security.

• Ongoing discussions for a joint venture involving the private hospital portfolio are progressing with high-quality investors.

• The combined group targets 80–90% government-backed income, organic rental growth above 3%, and a BBB+ or better credit rating.

Portfolio and asset management

• 517 assets in the portfolio, with 22 fully let properties in Ireland valued at £292.6m and a new acquisition in Cork delivering a 7.1% yield.

• 43 asset management projects in the pipeline, expected to increase average rent by 15% post-completion.

• Rent review activities generated £2.1m in additional income, with open market reviews achieving a 7.6% uplift over previous rents.

• Development at South Kilburn completed to net zero carbon standards, with further projects on hold pending rental negotiations.

• Improving liquidity and interest from global infrastructure and pension funds expected to support future asset valuations.