October 19 2023
The second company to list on the JSE in 2023 is UK-based Primary Health Properties (PHP).
It’s been the dream of many an ambitious property investor to create and then list a specialised healthcare real estate investment trust (Reit) in South Africa. Growthpoint Properties, which is SA’s largest real estate company has created a private healthcare group which has exposure to strong performing hospital buildings and rents space to hospital tenants, but there is no guarantee that the company will attract enough investment from institutions and specialist investors to get the fund to a listable size.
However, here we have PHP. The listing will see 1.34-million PHP shares available at 12.5p (R2.87) each from October 24. The group will act as a currency hedge for South Africans. The rand has weakened markedly against the pound in 2023. On October 20 2022, one British Pound was worth R20.54 but today, it’s worth R23.18.
It’s also exciting for the JSE to receive a new entrant given how it has shrunk in recent years. The listing boom of property funds which occurred in the mid-2010s feels like a memory.
PHP owns primary healthcare properties in the UK and Ireland signed mostly to long-term leases and generates almost 90% of its rental income from government bodies such as the National Health Service (NHS) in the UK and Ireland’s Health Service Executive (HSE) in Ireland, according to the group’s prelisting statement.
The company listed on the London Stock Exchange (LSE) in 1998, where it is now valued at about £1.22bn (R28bn), and then became a REIT in 2007. Its current portfolio comprises 514 properties, valued at £2.8bn, of which 20 are in Ireland.
PHP wants to raise capital to fund acquisitions and diversify its shareholder base.
“PHP aims to operate in a relatively low-risk environment to generate progressive returns for shareholders through a combination of earnings growth and capital appreciation by investment in the primary healthcare real estate sector in the UK and Ireland, which is traditionally less cyclical than other real estate sectors,” it said.
PHP’s shares are down almost 40% over the past 18 months because of global interest rate hikes and fears of a recession following the turmoil in Ukraine and the Middle East.
alistair@propertyfash.co.za
