MIDAS SHARE TIPS: Primary Health Properties can help make the nation well... and increase your wealth

By JOANNE HART, FINANCIAL MAIL ON SUNDAY

Updated:

THE NHS is one of Britain’s best-loved institutions but it is creaking at the seams. The population is growing, the number of older people is increasing and, as we all live longer, the incidence of chronic disease is rising.

The Government has promised to increase the NHS budget but there are still far too many unnecessary admissions to hospital, particularly A&E. One way round it, advocated by experts, is to increase the range of services offered by GPs.

England is home to nearly 7,500 GP practices but only a third are in modern properties capable of taking the pressure off hospitals by offering services such as blood tests, minor surgery and after-hours care.

All mod cons: PHP builds GP practices that can take the pressure off NHS hospitals 

All mod cons: PHP builds GP practices that can take the pressure off NHS hospitals 

The rest tend to be in converted houses or even a couple of rooms in doctors’ homes. As such, they are increasingly unable to meet modern healthcare demands. 

Primary Health Properties (PHP) was established to bridge that gap. Founded by former accountant Harry Hyman in 1994, the company owns more than 300 purpose-built healthcare sites, which it rents out to GPs and related professionals, such as pharmacists, dentists and physiotherapists.

Now Hyman is seeking to raise £100 million through a share placing to add to PHP’s estate. The new shares are available at 108p – below the current market price of 110¼p – and the offer is open to both new and existing shareholders.

They should take it, as PHP has a long and robust track record. Floated in 1996, it has increased its dividend every year since then and the stock price has risen steadily as well.

Midas first recommended PHP in October 2008, when the shares were 280p. Since then, the business has divided its share capital into four, so the original price is equivalent to 70p today. With the shares now at 110¼p, they have risen almost 60 per cent, with the added bonus of generous dividends.

Shareholders can also feel that they are helping to improve the NHS, while earning a decent return for their efforts.

New technology is transforming the amount of work that can be carried out at GP level and some of the most up-to-date sites can even do X-rays and scans. Over time, 24/7 walk-in facilities will be available too.

PHP has also expanded into the Republic of Ireland, which suffers from many of the same healthcare issues as the UK. The money raised from the placing will be used in both countries.

Hyman has already identified a pipeline of opportunities worth about £150 million. Rents are agreed in advance with the Government so virtually all the income that PHP receives is guaranteed by the NHS or its Irish equivalent.

Last year, PHP paid a 5.25p dividend. This year, a dividend of 5.4p is forecast, putting the shares on a yield of around 5 per cent.

Midas verdict: Primary Health Properties offers solid, Government-backed income growth and the chance to invest in a business that is contributing to a better health service. Shareholders who bought back in 2009 should stick with the stock and take advantage of the share offer. For new investors, this is an ideal time to buy.

Traded on: Main market Ticker: PHP Contact: phpgroup.co.uk or 020 7104 5599

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