Primary Health Properties (LON:PHP) reported a 9% increase in adjusted earnings per share for the first half of 2026, as rental growth, merger synergies and a full-period contribution from its acquisition of Assura supported results.
The healthcare property investor said adjusted earnings rose to £98 million, while adjusted earnings per share increased to 3.8 pence. The company said this supports its projected 2026 dividend of 7.3 pence per share, which it described as fully covered. PHP also marked its 30th consecutive year of dividend growth.
Rental growth and stable valuations
PHP generated £4 million of additional income from like-for-like rental growth during the period. Rent reviews settled in the half produced a 6% uplift on previous passing rent, equivalent to annualized growth of 3.2%, slightly ahead of the company’s previous 3% guidance.
Open-market rent reviews delivered a 6.3% increase over prior passing rents, according to the company. PHP said it completed 29 asset-management transactions, including projects, lease re-gears and new lettings, with a combined yield on cost of about 6% on modest capital expenditure.
Richard, who presented the financial results, said the company’s portfolio was let at a weighted average rent of £200 per square meter. Asset-management activities have achieved rent rebasing increases of around 15%, while developments completed in 2025 averaged rents of £260 per square meter. Four schemes in the 2026 development pipeline are expected to average £280 per square meter, providing evidence for future rent reviews.
The property portfolio generated an £18 million valuation surplus, with £29 million of value from rental growth partly offset by an £11 million deficit from one basis point of yield expansion. PHP’s net initial yield remained 5.4%, while the investment portfolio value held at £6 billion and adjusted net tangible assets remained £1.04 per share.
The portfolio had 99% occupancy, a 10-year weighted average unexpired lease term and 76% government-backed income. Management said more than 80% of future income has government-backed, investment-grade support.
Assura synergies and refinancing progress
PHP’s EPRA cost ratio declined to 8.7% from about 10%, reflecting merger-related scale benefits and cost discipline. Management expects the ratio to remain below 9%, with further savings anticipated in the second half following the internalization of Assura’s facilities-management function.
The company refinanced £1.2 billion of debt during the first half, including an £800 million revolving credit facility involving eight banks and a new £400 million two-year term loan. The refinancing left just under £260 million of acquisition bridge facilities outstanding.
Management expects to repay the remaining bridge balance in the coming weeks using proceeds from a planned private hospital joint venture. The new facilities carried credit margins approximately 40 basis points lower than the debt being replaced.
- Average cost of debt was 3.8% in the first half.
- PHP expects this cost to decline to 3.5% in the second half after deleveraging actions are completed.
- The group had £300 million of undrawn liquidity after capital commitments.
PHP said it expects to become 80% unsecured in the near term and continues to target 90% unsecured borrowing. It expects its loan-to-value ratio to move into the low 50% range in the short term, with a longer-term target below 50%.
Private hospital joint venture
PHP has agreed terms on an exclusive basis with an unnamed global, long-term institutional investor for a joint venture involving its £700 million private hospital portfolio. The venture is expected to begin with 50/50 ownership, with flexibility to alter ownership proportions in the future. PHP will act as asset manager and expects to receive management, development and potential performance fees.
Management said due diligence is well advanced and completion remains targeted for later in the summer. In addition to helping repay bridge debt, the transaction would allow PHP to retain an interest in the private hospital assets and their future growth potential.
The company also plans to transfer £103 million of assets into its existing primary-care joint venture with USS and has completed £8 million of targeted disposals. Management said it sees further opportunities to use the USS venture and other potential buyers to recycle capital as it works toward lower leverage.
Development pipeline and neighborhood health centers
PHP highlighted growth opportunities tied to the NHS’s neighborhood health center strategy, which aims to expand healthcare services in community settings. The company said three of its assets were among the first 27 existing buildings identified as neighborhood health centers.
Among the projects discussed was a £90 million community healthcare development in Weston-super-Mare, scheduled for completion in 2027. The scheme is partly funded by an NHS grant and requires £2.3 million of PHP investment through its USS joint venture, according to management. PHP expects income returns above 8% and double-digit total returns from the project.
A £5 million medical center in Tetbury is also being funded through the USS venture and is expected to generate a yield on cost above 9%. PHP said future projects at Brockworth and Coleford could deliver yields on cost above 12%.
The company also cited a £21 million private hospital and day-surgery development in Peterborough for Ramsay Health Care. The asset is expected to enter the new private hospital joint venture after completion.
Mark said PHP remained focused on completing its post-merger objectives, including finalizing the hospital venture, repaying bridge facilities and continuing to build rental growth through portfolio management and development activity.
About Primary Health Properties (LON:PHP)
PHP is a leading investor in critical healthcare infrastructure in the UK and Ireland.
The overall objective of the group is to create progressive returns to shareholders through a combination of earnings growth and capital appreciation. PHP has an unbroken 30 year track record of dividend growth.
To achieve this, PHP invests in healthcare real estate let on long-term leases, backed by secure underlying covenants where the majority of rental income is funded directly or indirectly by a government body.
