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 targeted £9 million annualized synergies within two months post-CMA clearance, mainly from reduced people costs and professional fees, with integration ahead of plan.

• Economic control of Assura since August, with strong rent review performance and increased exposure to inflation and long leases.

• 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

• Net debt at £3.4 billion with significant liquidity headroom of £552 million after capital commitments.

• Refinanced Assura debt facilities and secured a new £1.225 billion bridging loan, with £1 billion remaining after partial cancellation.

• Focused on reducing leverage below 50% LTV, targeting net debt/EBITDA of 9–9.5x and interest cover of 2.5x.

• Weighted average cost of debt at 3.7% and average maturity just over four years.

• Fitch confirmed BBB+ credit rating (negative outlook) post-merger, expecting lower credit margins due to increased scale.

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 ambulance hubs, private hospitals, and net zero carbon projects, totaling £64.6 million with an average yield on cost of 5.4%.

• USS joint venture progressing, with £170 million of assets and a target of £400 million, providing a low cost of capital.

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

• Four non-core assets sold for £8.3 million post-combination, with assets injected into JVs sold at or near book value, supporting NAV.