Primary Health Properties’ transformational 2025: bigger, bolder, and still growing the dividend
Primary Health Properties (PHP) has unveiled a set of preliminary results that reflect a truly transformational year. The merger with Assura has created a £6.0 billion healthcare REIT with a contracted rent roll of £342 million and the scale to matter in both UK primary care and private hospitals, plus Ireland. Better still for income hunters, PHP has now chalked up 30 consecutive years of dividend growth and lifted the quarterly run-rate again for 2026.
Key results at a glance
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Net rental income | £230m | £154m | +49% |
| Adjusted earnings | £131m | £93m | +41% |
| Adjusted EPS | 7.3p | 7.0p | +4% |
| IFRS profit after tax | £119m | £41m | +190% |
| Dividend per share | 7.1p | 6.9p | +3% (112% cover) |
| Portfolio valuation | £6.0bn | £2.8bn | +115% |
| Contracted rent roll | £342m | £154m | +122% |
| EPRA NTA per share | 99p | 103p | -4% |
| Loan to value (LTV) | 57% | 48% | +9ppts |
Assura merger: why scale now matters
PHP closed the combination with Assura in August and completed the integration steps after CMA clearance in late October. The deal more than doubled the portfolio to £6.0 billion across 1,142 assets, kept occupancy at 99%, and extended the weighted average unexpired lease term (WAULT) to 10.8 years. WAULT is simply the average time left on leases – longer is better for visibility of income.
Crucially, the integration is already paying for itself. Of the £9 million annualised cost synergies flagged, £7.5 million (83%) has been delivered since clearance, coming mainly from people costs and removing duplicated fees. Management is also pushing hard on balance sheet optimisation with joint ventures and disposals to trim leverage.
Dividend milestone and outlook for income
Income investors will like this bit. PHP paid 7.1p per share for 2025, up 3% and fully covered by adjusted earnings (112% cover). The second quarterly dividend for 2026 is set at 1.825p per share, equivalent to 7.3p on an annualised basis – again a 3% step-up. The stated aim remains a progressive, fully covered dividend.
Rental growth is firming and feeding valuations
Rental growth was a standout positive. Across 665 rent reviews, PHP achieved an average uplift of 6.8% against previous passing rent, translating to 3.2% growth on an annualised basis in 2025. Early 2026 momentum looks a touch better, running at 3.4% annualised on reviews settled in the first two months.
That pricing power, plus asset management, delivered a £72 million valuation gain which more than offset a modest 3 bps outward yield move (a £24 million headwind). The net result was a £48 million revaluation surplus for the year. For context, NIY (net initial yield) was 5.4% versus 5.2% in 2024; this partly reflects the addition of higher-yielding private hospitals.
Portfolio mix: primary care core, with new growth legs
After the deal, 76% of income is government-backed (down from 89% pre-merger due to the private hospitals), with a stated plan to move back into the 80% to 90% range. Private hospitals now account for 13% of the portfolio and Ireland 6%.
- Private hospitals: 33 sites with rents up 3.2% in 2025 and rent cover improved to 2.8x. A strategic joint venture is expected in 2026 to recycle capital and reduce leverage while retaining economic exposure.
- Ireland: 28 assets valued at £341 million (€391 million), NIY 5.1%. PHP acquired the Laya Healthcare facility in Cork for €22 million/£18 million at a 7.1% earnings yield and is advancing several forward-funded schemes.
The NHS 10-year Health Plan is a powerful tailwind, pushing activity from hospitals into community settings via “Neighbourhood Health Centres”. PHP’s asset base and relationships are well matched to this shift, and the company is already seeing rents on new projects rebasing to £218 per sq m for asset management and £277 per sq m for developments – important evidence to support future rent reviews.
Balance sheet: higher leverage now, a clear path down
LTV sits at 57% versus a 40% to 50% target, a direct consequence of the transaction. Management’s near-term priorities are:
- Completing a private hospital JV and expanding the primary care JV – £103 million of assets agreed for transfer, expected to release £82 million of cash net to PHP.
- Selective disposals of non-core assets (four sold for £8.3 million post-combination).
- Refinancing acquisition facilities and restoring a higher proportion of fixed/hedged debt.
There is ample liquidity to execute: £571 million of undrawn facilities and cash after capital commitments, average cost of debt at 3.7%, and 4.1 years weighted average maturity on drawn facilities. Interest cover is 2.8x and 73% of debt is fixed or hedged.
Net asset value and costs
EPRA Net Tangible Assets (EPRA NTA) per share came in at 99p, down 4%, reflecting the share issuance and transaction costs. The underlying portfolio revaluation added 2p per share. On an “Adjusted NTA” basis, which adds back the mark-to-market benefit of fixed-rate debt, the figure is 104p.
Cost discipline remains a hallmark. The EPRA cost ratio was 9.8% (excluding Axis and direct vacancy costs), which is among the lowest in the UK REIT sector.
What I like in these results
- Scale and momentum: rent roll of £342 million and 99% occupancy give strong earnings visibility.
- Rental growth improving: 3.2% in 2025 and 3.4% annualised early in 2026, with supportive evidence from new project rent levels.
- Synergy delivery: 83% of the £9 million annualised target already banked, with more to come.
- Dividend dependability: 30 years of consecutive growth and fully covered payouts.
- Strategic optionality: JV routes to recycle capital and nudge government-backed income back into the 80% to 90% range.
And the watch-outs
- Leverage: LTV at 57% is above target. The deleveraging plan (JVs and disposals) needs to land in 2026.
- NTA dilution: EPRA NTA per share fell to 99p due to deal mechanics and costs – not unusual post-merger, but worth tracking.
- Interest rate exposure: average debt cost is 3.7% with 73% fixed or hedged; further hedging and refinancings will be important if markets stay choppy.
- Government-backed income: now 76% after adding private hospitals; management is aiming back to 80% to 90%.
- Rent review backlog: 1,159 open market reviews outstanding (£169 million of rent) rely on District Valuer settlements, though evidence is improving.
Why this matters for shareholders
PHP has emerged as the UK’s largest healthcare REIT with sector-leading cost efficiency, long leases, and high occupancy. The merger expands its pipeline, enhances bargaining power, and introduces new growth legs in private hospitals and Ireland. The near-term story is simple: deliver the promised synergies, recycle capital via JVs, reduce LTV back to 40% to 50%, and keep compounding rent.
With the NHS’s plan pushing care into the community, and PHP demonstrating tangible rental growth, the ingredients are in place for continued, fully covered dividend progression. Execution on deleveraging and refinancing in 2026 is the key swing factor for valuation.
Jargon buster
- EPRA NTA: a standardised measure of net assets for property companies, focused on long-term asset value.
- LTV (Loan to Value): net debt as a percentage of property value – a gauge of leverage.
- WAULT: weighted average unexpired lease term – how long, on average, leases have left to run.
- NIY: net initial yield – the starting income yield of a property after costs.
- PID: Property Income Distribution – the REIT element of dividends paid out of rental profits.
Bottom line
Transformational scale, improving rental growth, and a 30-year dividend growth streak – PHP’s 2025 ticks the right boxes. The task for 2026 is to turn scale into a stronger balance sheet by executing the JV and refinancing plan. Do that, and the enlarged group looks well set to keep delivering progressive, fully covered income in a structurally growing sector.
