Primary Health Properties (PHP) Trading update summary

Integration and Strategic Developments

• Completed transformational combination with Assura, creating a £6 billion healthcare REIT focused on primary care and private hospitals.

• Achieved 60% of the targeted £9 million annualized synergies from the Assura merger within two months post-CMA clearance, mainly from reduced people costs and professional fees, with further updates expected as integration progresses.

• Economic control of Assura since August has enabled strong rent review performance and accelerated integration.

• Ongoing integration and portfolio review to establish new joint ventures and further disposals to reduce leverage to 40-50%.

• Board changes include the appointment of Jonathan Davies as independent Non-executive Director for continuity during integration.

Financial Position and Capital Management

• Increased undrawn headroom to £552 million, supporting ongoing development and refinancing needs.

• Net debt at £3.4 billion, with weighted average cost of debt at 3.7% and average maturity just over four years.

• Plans to refinance the £1 billion bridging facility by 2026, with expectations of lower credit margins due to increased scale and a BBB+ rating.

• Focused on reducing leverage below the 50% cap through joint ventures and selective disposals, targeting net debt/EBITDA of 9x-9.5x and interest cover of 2.5x.

• Fitch confirmed BBB+ credit rating (negative outlook) post-merger.

Portfolio, Development Pipeline, and Asset Management

• Portfolio comprises 1,142 assets valued at £6 billion, with a WAULT of 11 years and 80-90% government-backed income.

• Development activity has increased, with new projects in Ireland and the UK, including net zero carbon projects, primary care centers, and private hospitals, benefiting from higher achievable rents.

• Six developments on site with a total cost of £64.6 million and average yield on cost of 5.4%.

• Recent projects, such as Tetbury and Weston-super-Mare, are setting rental benchmarks above £300 per square meter, supporting future rental growth.

• Advanced pipeline of 51 asset management projects expected to increase average rent by 15% post-completion.