Our property firm tip shows that bigger is better with its modern medical centres
BRITAIN is blessed with about 10,000 GP surgeries. Many are staffed with just two or three doctors, often practising in converted houses.
Some people enjoy the homeliness of these oldfashioned premises. Increasingly, however, pensioners and parents with young toddlers prefer custom-built practices, which offer a wide range of treatments in a clean, safe environment.
The traditional type of set-up worked well in its day, but medical advances and changing demographics are more suited to larger, modern centres.
Primary Health Properties owns 265 such locations and medical centres have a range of GPs and often include dentists and pharmacies too. These surgeries are well placed to reduce pressure on hospitals because they can handle patients who might otherwise go straight to A&E. As such, health centres have cross-party support, which is good news ahead of a highly uncertain General Election.
PHP’s centres are valued at just over £1billion and Hyman is keen to increase that to £1.5billion. The company is actively in talks about 25 new projects, with a total value of £100million, so Hyman should be able to achieve his target over the next few years.
Rents on these properties are almost entirely paid for by the Government and this income in turn finances PHP’s dividends. The payout for 2014 was 19.5p and this year a dividend of 20p is forecast, putting the company on a solid 5 per cent yield.
Hyman admits that navigating the complexities of the NHS can be a challenge, but after two decades at the helm of PHP, he has amassed plenty of experience.
The company went through some tough times during the recession, when bank funding was hard to come by, but it is now on a solid footing, with several strong banking relationships and a number of bond issues too.
Midas verdict: Primary Health Properties is an attractive income stock with a decent bit of growth potential tagged on too. Existing investors should hold. New investors should take a close look.