PHP on target for 29th straight year of dividend growth

Times

07-07-2025

One of Britain's largest NHS landlords is heading for its 29th consecutive year of dividend growth, underpinned by rising rents and the recovering valuations of its buildings.
Primary Health Properties also expects to benefit from the government's recently announced ten-year health plan, which it said is 'clearly positive'. Part of the plan is to shift more services into the community and the healthcare centres of which PHP owns more than 500 around the UK.
'It's costing [the government] £500 now for every patient going into hospital, but if that patient is in primary care, it's £40 to £50. It's no wonder they want to push outpatient services into the community,' Mark Davies, chief executive of PHP, said. 'They want to do that in the next ten years but they can't do that from the existing estate. We're well placed to work alongside government and deliver these neighbourhood health centres in communities that we're already invested in.'
The consensus in the industry is that the shortage of healthcare facilities in the UK will only worsen as the population grows ever larger and people live longer. Landlords, including PHP, have slowed their development programmes or stopped them completely as rents have failed to keep up with inflation, making new sites economically unviable.
Rents, though, are rising. Following a number of reviews so far this year, PHP generated net rental income of £78.6 million between January and the end of June: 3.1 per cent above the £76.2 million it generated in the same period of 2024.
'London is definitely leading the charge in terms of [getting to] that rental level we need to enable new developments,' Davies, 50, said. 'But we are now looking at some opportunities across the country that weren't on the table in February [when PHP published its annual results]. It's a reflection of the change of government and an absolute commitment to reduce waiting lists.'
Commercial property valuations, after a tough couple of years, are beginning to improve. The value of PHP's property portfolio rose 0.7 per cent to £2.81 billion in the first six months of this year, marking its first increase since 2020.
• PHP adds £27m dividend to its bid to merge with Assura
PHP has already paid out 3.55p per share in dividends in 2025 and the next quarterly dividend of 1.775p per share will be paid on August 15. Analysts expect it to pay 7p per share in total this year, slightly above the 6.9p it distributed in 2024.
As such, 2025 is on course to be the 29th year in a row that PHP has lifted its dividend. 'It's our job to make sure we keep this progressive dividend policy that we've had in place for a long, long time now,' Davies said.
PHP struck a £1.7 billion deal last month to merge with its bigger peer, Assura, which is also being circled by US private equity firms. Davies has used the prospect of higher dividends and improving rents and valuations as reasons that Assura shareholders should take his deal and retain exposure to the healthcare property sector. 'That has been our pitch: this is not the time to be selling out,' he said.
• NHS landlord Primary Health steps up its battle for rival Assura
Bjorn Zietsman, a property industry analyst at Panmure Liberum, said the latest trading update 'reinforces the strategic and financial rationale for PHP's offer for Assura'. PHP shares rose ¼p, or 0.3 per cent, to 96¾p.