TIDMPHP
RNS Number : 5156T
Primary Health Properties PLC
14 December 2012
News Release
14 December 2012
Primary Health Properties PLC
Acquisition of Apollo Medical Partners Ltd
Primary Health Properties PLC ("PHP"), one of the UK's largest
providers of modern, purpose built primary healthcare facilities,
announces that it has unconditionally agreed to acquire the entire
issued share capital of Apollo Medical Partners Limited ("AMP"), an
investor in primary care and pharmacy properties with a UK wide
portfolio.
-- Consideration payable of approximately GBP10.2 million,
including transaction costs of GBP0.6 million
-- Consideration will be settled as to
o GBP4.2 million payable in cash on completion (including
transaction costs)
o GBP1.8 million in cash deferred until delivery of assets under
construction, and
o the issue on completion to the vendors of AMP of 1,231,395 new
Ordinary shares of 50p each in the capital of PHP
-- The Consideration Shares will be subject to a twelve month
lock-in and subsequent 12 month orderly market agreement
-- High quality portfolio of 14 primary care properties across the UK
o 11 are completed assets, 10 of which were constructed within
the last five years
o Three due for completion between February - August 2013
-- Total rent roll on completion of GBP3.8 million, reflecting a
net initial yield on actual acquisition cost of 5.9 per cent
-- A weighted average lease length of 18 years
-- Assumption of fixed cost debt of GBP49.8 million
Application is being made to the UK Listing Authority for
admission of the Consideration Shares to the Official List and to
trading on the London Stock Exchange. It is expected that admission
will become effective and dealings in such shares will commence on
or after 19 December.
Following admission of the Consideration Shares, the total
number of ordinary shares in issue will be 76,034,208.
AMP owns 14 primary care properties, 11 of which are completed
assets, all but one constructed within the last five years, and
three that are on site with planned completion dates between
February 2013 and August 2013. GBP1.8 million of the above cash
consideration is deferred and released in part against the delivery
of each of the three assets still under construction. The total
rent roll once all assets are complete will be GBP3.8 million.
This high quality portfolio is let to General Practitioners,
Primary Care Trusts, NHS bodies and pharmacy operators with a
weighted average lease length remaining of 18 years. Rental income
is derived 92% directly or indirectly from the NHS with the
remainder largely from strong covenant pharmacy operators. The
properties are located across mainland UK.
The assets have been acquired at a total cost of GBP64.6
million, including transaction costs, reflecting a net initial
yield to PHP of 5.9 per cent.
The portfolio has been independently valued by Lambert Smith
Hampton at an aggregate of GBP62.3 million, which results in a
reduction of net asset value of GBP2.3 million or 3.0 pence per
share. There are a number of opportunities within the portfolio to
add to the rent roll and secure increases in valuation.
PHP's costs of the transaction of GBP0.6 million are
significantly below industry standard purchaser costs for property
transactions of GBP3.6 million, reflecting the saving due to the
corporate nature of the transaction.
In addition to the consideration payable, PHP will assume AMP's
GBP49.8 million of fixed cost debt. The assumed debt has a weighted
life of approximately 18 years and will be incremental to the
Group's existing debt facilities.
PHP will look to re-set or refinance this debt at the earliest
opportunity to lock in to historically low interest rates and
achieve a cost of funding of c.200 bps below the transaction
initial net yield. An allowance has been made for a proportion of
the potential cost of re-setting the debt in agreeing the
consideration.
The Apollo Capital Projects Development team ("ACPD"), a sister
company of AMP and led by Johnny Dryburgh, have developed, procured
and managed the portfolio. ACPD will complete the procurement and
handover into occupation of the three schemes that are under
construction.
PHP have entered into a Partnership Agreement with ACPD with an
option to fund and acquire future schemes in their ongoing
development pipeline.
Following completion, PHP's portfolio will comprise of 183
primary care properties with a total value of GBP643.3 million
(including commitments). Total debt facilities available to PHP
will be GBP508.5 million, of which GBP399.9 million will be drawn
or committed. The group's contracted rent roll will increase to
GBP38.9 million.
PHP believes that the acquisition adds high quality assets to
its existing portfolio and increases its recurring income surplus
which will reduce the proportion of its current dividend that is
partially uncovered by earnings.
Harry Hyman, Managing Director of PHP, said:
"This is an important acquisition for PHP which demonstrates our
ability to acquire modern, well-let portfolios at cash yields ahead
of the current portfolio net initial yield. The acquisition adds 14
high quality assets to our existing portfolio, boosts PHPs rental
profits and is in line with management's aim of returning to full
dividend cover at the earliest opportunity."
Acquired Portfolio
Property Region m(2)
Clydach Medical Centre, Clydach Wales 1,549
------------------------ -------
Tweedale Medical Practice, Fort William Scotland 3,468
------------------------ -------
Govan Medical Centre, Govan Scotland 510
------------------------ -------
Dr Youd & Partners, Heckmondwike
Medical Centre Yorkshire & Humberside 1,600
------------------------ -------
Dr Hoggins & Partners, Mold Medical
Centre Wales 986
------------------------ -------
Old Kilpatrick Medical Centre, Old
Kilpatrick Scotland 571
------------------------ -------
Rhyl Medical Centre, Rhyl Wales 1,706
------------------------ -------
Rippendon Medical Centre, Rippendon Yorkshire & Humberside 1,090
------------------------ -------
Dr Eisner & Partners, Shipley Yorkshire & Humberside 2,394
------------------------ -------
Dr Bondi, Sudbury Medical Centre East Anglia 1,063
------------------------ -------
Port Tennant Practice, Swansea Wales 2,901
------------------------ -------
Carlton Medical Practice, Bradford Yorkshire & Humberside 705
------------------------ -------
Rumney Medical Practice, Cardiff Wales 2,210
------------------------ -------
Cloughmore Medical Practice, Cardiff Wales 1,042
------------------------ -------
Total 21,795
-------
Analysis of rental income by region
Region Proportion
Wales 46%
-----------
Scotland 24%
-----------
Yorkshire & Humberside 27%
-----------
East Anglia 3%
-----------
More information on Primary Health Properties PLC can be found
on www.phpgroup.co.uk
For further information please contact:
Harry Hyman Phil Holland
Managing Director Deputy Managing Director
Primary Health Properties Nexus TradeCo Limited
PLC Tel: 020 7451 7050
Tel: 020 7451 7050
Tim Walker-Arnott David Rydell / Victoria Geoghegan /
Property Director Elizabeth Snow
Nexus TradeCo Limited Pelham Bell Pottinger
Tel: 01483 749033 0207 861 3821
This information is provided by RNS
The company news service from the London Stock Exchange
END
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