First-half net rental income jumped by 123% to £176mn, largely reflects last year’s acquisition of Assura.
Underlying net profit rose at a slower pace of 109% to £98mn, with top-line growth partly offset by faster growing admin and financing costs.
Occupancy remained flat at 99%. The loan-to-value (LTV) ratio remained at 57% over the first half, above the group’s 40-50% target level due to the Assura acquisition. Asset sales are expected to see this figure fall to around 53% by year-end.
Dividend payments totalled 3.65p per share, up 2.8%.
The shares were broadly flat in early trading.
Our view
PHP got off to a solid start in 2026. Growth figures were boosted by last year’s acquisition of Assura, but under the hood, things are ticking along nicely. Rent reviews are helping to lift the top line, occupancy remains extremely high, and Ireland continues to deliver strong growth.
Both companies focus on primary healthcare sites across the UK and Ireland, where demand for high-quality facilities is expected to rise. PHP has historically been the stronger operator, and good progress has been made to reduce overlapping operations, streamline Assura’s outgoings, and lower the overall cost ratio.
The deal included a £1.2bn credit facility from a group of banks. The aim would be to repay this through asset disposals and joint ventures, bringing the loan-to-value (LTV) ratio back into its target range of 40-50%, and good progress is already being made on these fronts.
PHP has tended to operate at the upper end of that range, which is high by industry standards. But the Middle East conflict has increased the likelihood of interest rate hikes this year. If rates rise, it creates a mechanical headwind for the LTV ratio as property values fall. As a result, the balance sheet is something to keep an eye on.
A higher cost of capital in today’s market means attractive development sites are limited, and PHP is lobbying hard with bodies like the NHS to make projects more viable. There’s progress, but only in areas where the need for new buildings is strongest.
It’s a bit of a balancing act though, as performance over the past couple of years has been driven by rent hikes. Those same elevated costs that limit development opportunities are giving landlords like PHP more bargaining power at the negotiating table.
Looking ahead, we think PHP has several features that underpin long-term dividend potential. NHS backlogs mean improving access to primary care is a key component of the UK government’s latest plans. And, with 76% of PHP’s rent roll funded by the NHS or its Irish equivalent (targeting 80–90%), tenant risk remains low.
Ireland is also a key growth driver, with arguably better market dynamics than here in the UK. Leases tend to be longer term, with better yields, and it’s a key area of focus for future growth.
We continue to like PHP as a play on a resilient UK property segment and a potential beneficiary of the renewed political focus on the NHS. The valuation isn’t stretched, and the dividend yield is attractive, though not guaranteed. However, there remains a risk of falling property values if rates move higher.
Environmental, social and governance (ESG) risk
Real estate is relatively low risk in terms of ESG. One of the principal drivers of this risk is the capacity to integrate material ESG considerations into decision-making, risk management and public reporting; the most material ESG considerations are environmental, like carbon emissions reduction, energy efficiency and physical climate risk. The rise of hybrid working has also reduced demand for commercial property, making product governance and customer satisfaction a top priority. Other risks to monitor include labour relations, business ethics, and emissions & waste.
According to Sustainalytics, PHP’s overall management of material ESG issues is strong.
Responsibility for overseeing ESG issues is assigned to board level and there is an adequate environmental policy in place. Improvements could be made to ESG related disclosures and executive compensation does not appear to be linked to ESG performance. PHP has targets for increasing investment in sustainable buildings and deadlines to meet those targets, in line with industry best practice.
Primary Health Properties key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.