PHP excited by ‘compelling’ outlook for real estate as the investment trust seeks to clinch a takeover of rival Assura.

has reported positive half-year results, saying it is excited about the ‘compelling’ outlook as the real estate investment trust seeks to clinch a takeover of rival that would boost its portfolio to £6bn. 

For the six months to 30 June net rental income rose 3.1% to £78.6m with adjusted earnings per share up 2.3% to 3.54p to cover 3.55p of dividends paid by the 7%-yielder. 

Adjusted net tangible assets edged 1.1% higher to 106.2p, putting the shares at 96.5p at Friday’s close on a 9% discount. 

Chief executive Mark Davies said: “The improving rental growth outlook and a stabilisation of our property yields at 5.25% signal that we’ve moved through a key inflection point in the property cycle with a very encouraging outlook ahead.” 

In addition to its transformational merger with Assura, for which it has made an improved share and cash offer recommended by the target’s board, the company is also in discussions with investors about forming a joint venture to sell a stake in Assura’s private hospital portfolio (should the takeover go through) – to recoup capital to pay down debt required to broker the deal. 

Last week’s 10-year health plan for England announced by the government has also cheered PHP, which says the policy shifts from hospital to community, analogue to digital and sickness to prevention, play into its strengths.  

It said, “the plan should be a catalyst for unlocking significant future opportunities in primary care and community diagnostics.”

[QuotedData’s Richard Williams comments: “This update from PHP and the 10-year plan announced last week prove that real estate in structurally supported sectors are in bargain territory right now, with depressed share prices and bottom of the market property values. The only way is up, and with an ageing population and significant amount of investment required to transition from hospital to community the outlook for PHP is bright. Assura shareholders will be crossing their finger that the merger goes through and they stay invested in the UK healthcare sector.”]