October 19 2026 10:18
Primary Health Properties (PHP), the UK healthcare REIT with a secondary listing on the JSE, has struck a deal with a Singapore sovereign wealth fund that will cut its debt sharply after last year’s takeover of Assura.
PHP has entered into a conditional agreement to establish a 50:50 joint venture with GIC to invest in private hospital infrastructure. The venture will be seeded with 27 private hospitals from PHP’s existing portfolio, valued at about £700m.
The hospitals will be transferred at a 5% discount to their 31 December 2025 book value. The portfolio has a weighted average unexpired lease term of 22 years, backed by long-term index-linked leases.
Bridge loan to be cleared
Completion is expected in November 2026, and PHP expects net proceeds of about £500m. The money will repay variable-rate debt, including what is left of the bridging facility raised to buy Assura in 2025. At the time of its interim results, only £260m of the original £1.2bn bridge remained.
The deal is expected to reduce PHP’s net debt to about £2.9bn, from £3.4bn at 30 June. That matters because the group’s loan-to-value ratio stood at 57% at mid-year, well above its 40–50% target range. Management expects LTV to move into the low 50% range in the short term, with a longer-term target below 50%. Once the hospital JV completes, PHP plans to seek an investment-grade credit rating from Fitch covering the full group.
PHP is not walking away from the hospitals. It will keep a 50% interest and act as property and asset manager, adding a recurring management fee stream with the potential for performance fees which will help the fund.
CEO Mark Davies said the deal would reduce borrowings, improve returns on invested equity and give PHP a long-term institutional partner to help fund further investment in UK hospital infrastructure.
Long time coming
The market has been waiting for this. Earlier this year PHP said it had received offers from four credible counterparties for the hospital portfolio, and by July it had agreed exclusive terms with an unnamed global institutional investor. Separately, PHP agreed to transfer £103m of assets into its existing primary care JV with USS, expecting net proceeds of £82m.
The underlying business is in good shape. Adjusted earnings per share rose 9% to 3.8p in the first half, and in its third-quarter update on 1 October, PHP said rental growth remained ahead of target. The group is targeting a fully covered 2026 dividend of 7.3p, which would be its 30th consecutive year of dividend growth.
alistair@propertyflash.co.za
Alistair Anderson edits Property Flash
