Primary Health Properties Plc (PHP) - Notice of Interim Dividend

[idpickering]

The Company announces that the first quarterly interim dividend in 2024 of 1.725 pence per ordinary share of 12.5 pence each will be paid as to 1.45 pence by way of a Property Income Distribution ("PID") and the remainder as an ordinary dividend on 23 February 2024 to shareholders on the register on 12 January 2024.

https://www.investegate.co.uk/announcem ... nd/7973963

Also posted on Company News here; viewtopic.php?p=638041#p638041

Ian (I hold in my HYP, and am topping up my PHP holdings tomorrow).

[Dod101]

The Company announces that the first quarterly interim dividend in 2024 of 1.725 pence per ordinary share of 12.5 pence each will be paid as to 1.45 pence by way of a Property Income Distribution ("PID") and the remainder as an ordinary dividend on 23 February 2024 to shareholders on the register on 12 January 2024.

https://www.investegate.co.uk/announcem ... nd/7973963

Also posted on Company News here; viewtopic.php?p=638041#p638041

Ian (I hold in my HYP, and am topping up my PHP holdings tomorrow).

I was thinking of doing the same as part of my reorganisation of my portfolio, having halved my holdings of tobacco shares. They currently have a good yield and the prospect of a reduction In interest rates should help them.

Dod

[idpickering]

I was thinking of doing the same as part of my reorganisation of my portfolio, having halved my holdings of tobacco shares. They currently have a good yield and the prospect of a reduction In interest rates should help them.

Dod

Thanks for your input Dod. I no longer hold any tobacco shares, and have invested in other high yielding shares such as PHP, to replace the 'lost' income from my tobacco holdings.. The top up of my PHP holdings tomorrow will bring them up to average capital value weighting in my HYP. Thereafter I shall look elsewhere for likely purchases.

Ian.

[chris]

PHP seems to be a favourite share with many adding to their holdings as the share price declines. The premise seems to be a good one in that they are renting properties to doctors and this should offer long-term stability without the fluctuations of the economy on occupancy.

However, looking at the accounts, I really don't think that this is a well run company and it probably deserves its low rating. I would also suggest that the current dividend level is unsustainable as it is more than the profit for the last couple of years (adjusting for the £53m exceptional income in 2021).

In 2018 it was a company with 733m shares and net debt of £670m and a dividend of £35m. In 2022 it had 1,442m shares, net debt of £1,276m and a dividend of £82m. Fixed assets have gone from £1,504m to £2,807m, an increase of £1,303m but this does not seem to have resulted in an economy of scale and profit after tax, if anything, has declined.

I would therefore be very wary of buying any more shares in the company. Rates look high at the moment but I think that the market have priced in a dividend cut and i would not be surprised if this happened. Net interest was very low last year and unless they have some good long-term loans at low interest in place, I can see increased pressure on the profit figure. I hold but am considering selling my holding.

[monabri]

PHP seems to be a favourite share with many adding to their holdings as the share price declines. The premise seems to be a good one in that they are renting properties to doctors and this should offer long-term stability without the fluctuations of the economy on occupancy.

However, looking at the accounts, I really don't think that this is a well run company and it probably deserves its low rating. I would also suggest that the current dividend level is unsustainable as it is more than the profit for the last couple of years (adjusting for the £53m exceptional income in 2021).

In 2018 it was a company with 733m shares and net debt of £670m and a dividend of £35m. In 2022 it had 1,442m shares, net debt of £1,276m and a dividend of £82m. Fixed assets have gone from £1,504m to £2,807m, an increase of £1,303m but this does not seem to have resulted in an economy of scale and profit after tax, if anything, has declined.

I would therefore be very wary of buying any more shares in the company. Rates look high at the moment but I think that the market have priced in a dividend cut and i would not be surprised if this happened. Net interest was very low last year and unless they have some good long-term loans at low interest in place, I can see increased pressure on the profit figure. I hold but am considering selling my holding.

That might explain why PHP is in the top 10 of UK shorted companies.

https://shorttracker.co.uk/companies/?sort=2&d=desc

[idpickering]

Cheers for your input guys. I heed the words of caution, but for me the comments from HL about PHP are very reassuring with regards to PHP being a sound HYP holding option.

Our view;

Primary Health Properties' purpose-built doctor's surgeries have a long track record of delivering results for shareholders and is now in its 27th consecutive year of dividend increases. As a REIT (real estate investment trust), PHP has to pay out the vast majority of profits as a dividend so that should ultimately feed through to investors' pockets, although of course no shareholder returns are guaranteed.

We believe that PHP's asset base is relatively defensive in the context of today's challenging macroeconomic environment. Rent collection rates were 99% in both 2021 and 2022, with 2023 rates trending in the same direction.

PHP has also successfully navigated the interest rate rises seen over the past year or so, with a stable average cost of debt of 3.3%. There is an impact on the investment market, largely relating to a lack of transactions as potential buyers try to wait out the higher-rate environment. That, plus the higher cost of capital, means PHP is relatively underweight in the development and investment arena for now. Instead, it's focused on the rental market, where it sees further upside.

We like the move. Those same elevated costs, and the lack of new supply, are giving landlords like PHP more bargaining power at the negotiating table. Plus, with 69% of rents up for review every three years and a further 25% index-linked, there's plenty of scope to benefit from the improving rental market.

Looking to the future, we think PHP has several features that underpin long-term dividend-paying potential. The backlog of procedures in the NHS and the needs of an ageing population means investment in primary care facilities isn't going anywhere.

https://www.hl.co.uk/shares/shares-sear ... e-research

Ian.

[monabri]

Cheers for your input guys. I heed the words of caution, but for me the comments from HL about PHP are very reassuring with regards to PHP being a sound HYP holding option.

Our view;

Primary Health Properties' purpose-built doctor's surgeries have a long track record of delivering results for shareholders and is now in its 27th consecutive year of dividend increases. As a REIT (real estate investment trust), PHP has to pay out the vast majority of profits as a dividend so that should ultimately feed through to investors' pockets, although of course no shareholder returns are guaranteed.

We believe that PHP's asset base is relatively defensive in the context of today's challenging macroeconomic environment. Rent collection rates were 99% in both 2021 and 2022, with 2023 rates trending in the same direction.

PHP has also successfully navigated the interest rate rises seen over the past year or so, with a stable average cost of debt of 3.3%. There is an impact on the investment market, largely relating to a lack of transactions as potential buyers try to wait out the higher-rate environment. That, plus the higher cost of capital, means PHP is relatively underweight in the development and investment arena for now. Instead, it's focused on the rental market, where it sees further upside.

We like the move. Those same elevated costs, and the lack of new supply, are giving landlords like PHP more bargaining power at the negotiating table. Plus, with 69% of rents up for review every three years and a further 25% index-linked, there's plenty of scope to benefit from the improving rental market.

Looking to the future, we think PHP has several features that underpin long-term dividend-paying potential. The backlog of procedures in the NHS and the needs of an ageing population means investment in primary care facilities isn't going anywhere.

https://www.hl.co.uk/shares/shares-sear ... e-research

Ian.

I've posted a slightly more concerned view on the PHP companies board ( explanation of my comment on shorting level)

viewtopic.php?p=638111#p638111

[monabri]

Cheers for your input guys. I heed the words of caution, but for me the comments from HL about PHP are very reassuring with regards to PHP being a sound HYP holding option.

https://www.hl.co.uk/shares/shares-sear ... e-research

Ian.

Shareholders will hopefully click on the HL link .....and read the rest of the comments they make.

[Arborbridge]

This is all quite interesting to me - especially the "will it, won't it" aspect of where an investment is going to cut the mustard. I have a median weight holding of PHP, and although I feel tempted to indulge some more, there is little pressure to do so - although PHP is one of my valid choices for a topup.

Difficult dilemma. PHP shares are rallying from a low -along with many other shares hoping for an interest rate drop in the next year or so. So on the face of it, now is a good time to pick up some more to improve the atrocious XIRR I am currently nursing. Then we have the political risk and the pressures on the NHS.

Arb.

[Dod101]

This is all quite interesting to me - especially the "will it, won't it" aspect of where an investment is going to cut the mustard. I have a median weight holding of PHP, and although I feel tempted to indulge some more, there is little pressure to do so - although PHP is one of my valid choices for a topup.

Difficult dilemma. PHP shares are rallying from a low -along with many other shares hoping for an interest rate drop in the next year or so. So on the face of it, now is a good time to pick up some more to improve the atrocious XIRR I am currently nursing. Then we have the political risk and the pressures on the NHS.

Arb.

I doubt very much that there is little political risk involved with 'care in the community', given the pressure on hospitals and the desire to get care out into the community. They have a decent yield - 6.47% at year end according to my calculations so I would certainly go for them. I hold a good slug of them mind you.

Dod

[Arborbridge]

This is all quite interesting to me - especially the "will it, won't it" aspect of where an investment is going to cut the mustard. I have a median weight holding of PHP, and although I feel tempted to indulge some more, there is little pressure to do so - although PHP is one of my valid choices for a topup.

Difficult dilemma. PHP shares are rallying from a low -along with many other shares hoping for an interest rate drop in the next year or so. So on the face of it, now is a good time to pick up some more to improve the atrocious XIRR I am currently nursing. Then we have the political risk and the pressures on the NHS.

Arb.

I doubt very much that there is little political risk involved with 'care in the community', given the pressure on hospitals and the desire to get care out into the community. They have a decent yield - 6.47% at year end according to my calculations so I would certainly go for them. I hold a good slug of them mind you.

Dod

Yes, well, I might be tempted, simply because I see the share price beginning to move the right way, and they have a stable business model. The argument that they may find it harder to push up rents has "legs", but will that prevent them paying a decent dividend for my future needs? I doubt it - and similar arguments could be made for any company in a stretched economy.

By the way, I meant to add that these sorts of uncertainties reinforces the HYP-TJH doctrine of not over loading on any particular share. Spread the risk, always, and never fall in love.

Arb.

[kempiejon]

About 1 year ago I became interested in PHP. It was a share previously oft discussed around here that I hadn't been bothered about. I did not need any different shares or sectors for diversification so mostly glossed over the chat for a while. I don't recall what specifically pushed me to buy. Looking back they were not the highest yielder, dividend growth was not spectacular but consistent over 20 odd years so that probably did it. I added in a couple of tranches at just below today's price so it would be nice if as Arb suggest the share price moves in the right direction but it's the dividend I want so I'll refer back to at least 2 decades of increasing dividends at a CARG of about 3.5% over that time.
https://www.dividenddata.co.uk/dividend ... y?epic=php
At portfolio level it's probably a touch under median but not necessarily first choice for more.