Primary Health Properties PLC (LON:PHP), which last week completed its merger with MedicX Fund Limited, has contracted to acquire, by way of forward-funding, a new primary healthcare medical centre in Kew, London.
The FTSE 250-listed firm said the property is due to be completed in October 2019 and will have a net internal area of approximately 845 square metres at a total cost of £4.6mln.
The group, one of the UK's leading investors in modern primary healthcare facilities, said the main tenant of the completed development will be the GPs of the North Road Surgery, on a 25-year lease with three yearly reviews to market rent.
It added that CWC, a social prescribing charity, is taking a five-year lease of the remaining area. CWC has been set up to work in partnership with the NHS and Local Authorities in the delivery of new, purpose-built primary care centres in London, with a view to the better integration of primary health, social and community care in local communities.
The company said the acquisition increases PHP's total portfolio, following completion of the merger with MedicX Fund, to 484 assets, of which seven are currently under construction, with a gross value of over £2.3bn and a contracted rent roll of over £125.0mln.
Harry Hyman, PHP’s managing director commented: "We are delighted to announce this transaction, which is the first opportunity that has come through as part of the merger with MedicX, from which we see significant opportunities to grow our portfolio and support the modernisation of the primary care infrastructure and widening of the provision of healthcare services.
“We have a strong pipeline of acquisitions in the UK and Ireland and are well positioned to continue growing the portfolio in both jurisdictions."
Peel Hunt has 140p target price
Analysts at Peel Hunt reiterated a ‘buy’ rating and 140p price target on Primary Health Properties in a note to clients published following the completion of the all-share merger with MedicX.
They said: “Both sets of shareholders benefit from immediate accretion, with more to come through a combination of cost synergies and refinancing opportunities, plus an attractive and enlarged acquisition pipeline.”
The analysts added: “The c£1.5bn REIT can now add enhanced liquidity to its attractive income proposition, building upon its exemplary track record of growth and return generation.
“A yield of 4.3% underpinned by this durable and low-risk asset class puts PHP in pole position.”
In afternoon trading, shares in Primary Health Properties were trading at 128.20p, down 1.4% on Friday’s close.
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