After the recent focus on house builders I thought I would share a more steady property play which offers a healthy yield. This one is called Primary Health Properties (PHP) and as its name suggests it is a UK Real Estate Investment Trust (“REIT”) and the leading investor in modern primary healthcare premises. The objective of the Group is to generate increased rental income and capital growth through investment in primary health property in the UK leased principally to GPs, NHS organisations and other associated healthcare users.
I like this one because its properties are 99.7% let and have a 16 years weighted average lease length and the largely essential nature of the tenants with 92% of revenue government backed, unlike many here today gone tomorrow shop or restaurant tenants. I also like the yield which is currently 5.58% based on last years 19 pence dividend and a 340 pence share price. The dividend is also expected to rise modestly to 19.5 pence this year, as it has done for the last 17 years. This growth is supported by the upward only rent reviews and index linked rents in many cases, although it is not currently covered by earnings they are working towards this.
It is all about the yield with this one although you have the asset backing too, but the shares have tended to trade a bit above the conventional asset valuation which has not grown that quickly due to share issuance. Thus the share price has been pretty dull so as I say this one is mostly held for the indexed linked type yield it offers - it certainly beats Gilts, Indexed Linked Bonds and cash in the bank in my view.
That's all I have to say on this one, but if you would like a more in depth review of its prospects you can download below a recent sponsored research note from Edison which covers the recent results and the path to a covered dividend.