Primary Health Properties (LSE:PHP) — Interim Results

0:00 Good afternoon, and welcome to the PRIMARY HEALTH PROPERTIES PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab situated on the right hand corner of your screen. Please just simply type in your questions and press send. Before we begin, I'd to submit the following poll. And I'd to hand you over to Mark Davies, CEO. Good afternoon, sir. Good afternoon, Charlie. Good afternoon, everybody. Thanks for joining us this afternoon on a sunny summer afternoon.

0:27 With this afternoon, myself, Mark Davis, the CEO, and Richard Howell, our CFO, representing to you this afternoon our interim results for the six months ended 06/30/2026 has been an absolutely transformational period for our company. You will see that in the financial performance that we will present to you shortly. This is the first financial period that we've published with the benefit of the Assure merger now coming through into our financial results, and we're delighted with the acquisition. We'll give an update on the integration, the synergies, how active we've been in the capital markets, particularly in the debt capital markets.

1:16 There's lots to talk about on our joint ventures, which I'm gonna get to, and, also, we'll try and talk some some case studies to you as well. So first of all, it's our interim results, very strong set of financial results, very busy period for our company, and Richard will be going through those results, which have delivered 9% increase in our earnings per share during during the period, and we've made very good progress on our key key strategic objectives. But before I move on, I know there are literally hundreds of people on this call this afternoon, some of whom we've not met before. So I just wanted to introduce PHP to to those who've not met us before and also just remind everybody where we now sit as a business following the successful Asura merger of last year.

2:10 PHP operates principally in three resilient health care markets. We're one of the largest health care infrastructure investors in both The UK and across Ireland. Our current portfolio is 6,000,000,000. So we manage, own, and invest in 6,000,000,000 of health care assets, real estate assets. Our core portfolio is our primary care portfolio in The UK, which equates to about 5,000,000,000. We have 15% of the entire market share in UK primary care real estate. That puts us in a very strong position, and I'll maybe come back to that in a moment.

3:00 Principally, the the income that we generate from our portfolio of primary care assets in The UK is government backed. So very secure income, stable, and strong valuation performance, attractive fundamental tailwinds socially, demographically, economically. Principally, our assets are long income when we enter into new leases with our occupiers. Often, they're twenty, twenty five years or or longer. And because we have a policy that over 80% of our rent roll is paid for by The UK or Irish government, we have a very strong and secure covenant.

3:48 We do have many of our assets linked to inflation or fixed uplifts, and we'll give a breakdown of our portfolio metrics later on in the presentation. We have an undeniable track record of PHP. We've been doing this now for thirty years, and we have around 1,100 medical centers, GP surgeries, all purpose built in and around The UK. Second part of our business is in Ireland. We've been owning, managing, investing, developing primary care assets in Ireland now since around 2015, 2016, equates to about 300,000,000 of our total portfolio today. We also have significant market share in the Irish primary care real estate sector, which equates to about 15%.

4:38 In terms of those investment characteristics, again, principally, our core source of income is the HSE, which is the Irish version of the NHS. So the Irish government is ultimately paying the rent. Very strong demand for, the facilities that we own and new ones that we can create given the population growth, the aging population, the social and demographic drivers, that sit behind our business, provide those, you know, fundamental tailwinds. Again, a very strong and secure covenant. And in fact, in Ireland, our entire portfolio pretty much is linked to inflation, and we'll we'll talk a bit more about that performance later. And, of course, the assets are well located, well maintained, and we would describe our portfolio as the best in class when we think about health care infrastructure investing in The UK and in Ireland.

5:38 The third and final part of our portfolio is our private hospital portfolio. The majority of these assets came across to us during the Asura merger. The Asura team in private hospitals that we have retained have been investing in private hospitals now for about ten years. They have about 800,000,000 of assets if you include the private hospital, private clinic business we have here in The UK and also an asset that we own over in in Ireland. We have 5% of the total market share, so it's it's meaningful. It's significant enough, to give us great access to, information. But, also, we've established long standing relationships with all the leading private hospital operators, including Ramsey, Nuffield, Circle, HCA, Leyer, and Spire.

6:35 Again, attractive fundamental tailwinds, long income. In fact, our average lease length in our portfolio of private hospitals is over twenty years. And, again, it's a very strong and secure covenant all linked to inflation. So put all that together, and we you know, fundamentally, at the heart of our investment case is we we have a very secure income stream, a very stable and strong asset base, and there are attractive structural trends that support the growth of our business in the future. In simplistic terms, we are in a growth sector. I described earlier the the the platform, and I and I touched on the the team.

7:26 We we are the The UK's largest health care REIT. We have over 1,100 properties across UK and Ireland, as I described on the previous slide, 6,000,000,000 of assets, 99% occupancy. We're we're pretty much fully occupied in our portfolio as as the leading owner in The UK of purpose built GP surgeries, medical centers. No one is building new medical centers, new GP surgeries other than than us. And as you can imagine, the demand for these facilities is high and and growing. It's a very low risk, long term, noncyclical, secure government backed income portfolio, and our investors tell us that's one thing that they, you know, amongst other things, really like about our business and the investment case that sits around it. We have a thirty year track record. We've increased our dividend every year for the last thirty years, which remains fully covered. We've got confidence in our rental growth outlook. We're targeting 3% or more on on an annual basis going forward.

8:36 There's a slide in our presentation we'll try to get to later. You can see where the current trend sits around 3.2%. We're confident we can be at 3% or or more. We're operating in a growth sector. As I mentioned earlier, demographic tailwinds are high and growing. The other thing that really underpins the strength of our investment case is the, the government plan, the government shift, both here in The UK and in Ireland, to get more clinical services out of hospitals into primary care, supported by the ten year NHS plan, which came out last year. The government's commitment to build 250 new neighborhood health centers are very much front and center as part of that neighborhood health center model, the plan the government is looking to implement. We've already got three neighborhood health centers in our portfolio. We think that will will increase significantly in the future.

9:40 When lord Darcy was asked by the current government to commission a research report on the NHS and health care in this country, he concluded amongst other things that 50% of all existing UK primary care real estate is not fit for purpose. Now he's not talking about the real estate that we own, which is purpose built, often modern, flexible, space, which is what the NHS requires today. He's talking about the rest of the primary care estate, and that that creates a big, big opportunity for us in the future as the leading owner, manager, investor, and developer of new primary care real estate.

10:27 We've got great relationships, as you can imagine, at the heart of government, the heart of NHS, nationally, and locally all around the con country, and we're well placed to support the government in the implementation of its ten year plan. On the financial side, because we've been doing this for thirty years, we've been listed for thirty years that we opened the the stock exchange very recently, We've always delivered a strong financial performance. We've principally been able to do that because of the strength of the team here, the strategy, the active management of the portfolio. We're recognized as a very competent, very able asset manager, which has helped us deliver that track record through principally stable income and a very disciplined approach.

11:22 We are a very well run business. We have a strong control on overhead. We target an EPRA cost ratio below 10%. The synergies that have come through the Assure transaction of about 9,000,000, we're beginning to see the benefit of that now. We've delivered about 92% of those transaction synergies. So our EPRA cost ratio is now, I think, the second lowest in the entire sector. And when Richard talked to us about the debt later on, you can see we've got a a really efficient capital structure, strong support from the debt capital markets, banks, and and beyond with a low average cost of debt of 3.8%, which will come down to 3.5% later this year. We've always delivered with with clear focus and enhanced total property return, and, you know, the the growth rate on our dividend over that thirty year period equates to around 8%.

12:22 That sort of sets the scene. Now on to our results, which we published last week sorry, week before. Yeah. The these results are the first set of results that we have published where you can now start to see the benefit of putting PHP and Assura together. The combination is delivering earnings growth supported by our operational activities, all which goes to shareholder value. Our earnings per share is up over 9% during the half year. Our dividend has increased yet again and is fully covered. And as I mentioned earlier, we've been able to do that for thirty consecutive years. We have a real focus on rental growth, positive trend coming through. We'll talk a bit more about that later. You can see a 6% uplift on reviews settled during this period.

13:18 Very focused on asset management. We wanna do more deals, not less, and the quality of the team, the expertise, the knowledge, the relationships, the access to data that we have as a combined business puts us in a stronger position to do that going forward. I've already touched on the focus, the forensic focus act actually, on on cost and overheads and the low cost ratio.

13:44 We have a very resilient asset class with a stable net asset value, which is currently at a 100 and 4 p, and a growing pipeline of opportunities, asset management and development and beyond, which we'll talk about shortly.

14:01 Management priorities following the Asura merger that we set out at the time were very clear, and we've been very focused on delivering those objectives over this last six month period. We've been very busy. Integration has gone well. It is pretty much substantially complete. We've now delivered 92% of the total cost synergies on the merger, which total £9,000,000. So the benefit of that started to come through in this period, but you'll get to see more of that in the second half and beyond. The team, we've combined the best of both, focusing on generating future value from rent reviews, asset management, and risk control development.

14:50 We can definitely do that better as a combined business with more size and scale and a reduced cost of capital. At the time of the transaction, we took on a bit more leverage, so we have an elevated leverage post transaction, but we are well progressed in terms of deleveraging, on plan, on track by principally selling assets into, two joint venture vehicles. One is existing, UK primary care vehicle, that was established, by the issuer management team, which we inherited, which we're very, pleased with. And secondly, we have, agreed exclusive terms on our private hospital portfolio to establish with a new global, institutional investor, a fifty fifty on day one joint venture.

15:57 And those terms were agreed some time ago, and they're now well advanced in all the due diligence that's required to complete that transaction. So very well advanced on that. And then finally, at the time of the transaction, I mentioned the leverage that we had taken on. We had a £1,200,000,000 bridge facility. Sat here today, all of that's been repaid or refinanced with the exception of about £260,000,000, which will get refinanced, repaid in the next few weeks following the receipt of proceeds coming in from those two joint ventures that I've just described. And Richard, when he talks to us about the capital structure in a moment, will highlight the 40 bps reduction in credit margins he and his team have managed to achieve, principally as a consequence of the merger and the increased size and scale of the business.

17:01 Once we have repaid that bridge facility in a few weeks' time, completed the joint ventures that I described, PHP will then seek a strong investment grade credit rating. It's awaiting the proceeds of the JV, as I mentioned, but the work has been done on that in the background, and we're confident about the company's ability to do that in due course. I'll now pass you on to Richard, who's gonna talk you through the financial. Thanks, Mark, and good afternoon, everybody. Just looking at the key financial highlights for the first six months of the year. Obviously, the benefits of the combination with Assure last year are now flowing through to the enlarged group with strong earnings growth and operational performance.

17:52 Adjusted earnings increased to £98,000,000 driven by a full six months of income from Assurer, which added an extra £50,000,000 of income. This resulted in adjusted earnings per share of 3.8p, up 9%. Like for like rental growth generated an extra £4,000,000 of income, driven predominantly by rent reviews where we saw rents increase by 6% over the previous passing rent. As Mark has already mentioned, we've delivered £8,000,000 or 92% of the anticipated cost saving synergies arising from the merger. And that has resulted in one of the lowest cost ratios in the whole sector at 8.7%, down from 10% last year.

18:42 The underlying portfolio generated valuation surplus of £80,000,000 driven predominantly by rental growth, which generated a surplus of £29,000,000 offset by a very small one basis point outward yield shift movement equivalent to £11,000,000 deficit. Deals across the portfolio have generally remained flat, which is consistent with the second half of last year. So notwithstanding the volatility in gilt rates and interest rate markets, we've seen values in our sector remain stable, which is a very common theme across our portfolio. Investment portfolio remains unchanged at GBP 6,000,000,000 as is the adjusted net tangible asset per share at GBP 104 per share.

19:33 We continue to maintain very strong operational metrics with pretty much full occupancy at 99% and a long walk of just over ten years.

19:46 Looking at the strong progress we've made in terms of refinancing, a lot of the debt post merger. As Mark has already mentioned, we've completed £1,200,000,000 of refinancing in the year, which pretty much refinanced the bridging facility put in place when we acquired Assura last year. This remains these £260,000,000 outstanding, which should be cleared as part of the deleveraging plans that Mark mentioned earlier in the presentation. The first facility was an £800,000,000 revolving credit facility and term loan, where we have seen credit margins come in by 40 basis points, which really reflects the increased scale of the business.

20:33 We've also put in a new GBP 400,000,000 term facility for two years, which is really there to provide a bit of extra flexibility when we come to look at some further refinancing initiatives in the second half of the year. As a consequence of all these actions, the average cost of debt still remains at a very low 3.8%, and that is expected to fall to 3.5% once we repay the balance of the bridge facility in the second half of the year. The group also has just over £300,000,000 of undrawn liquidity headroom after capital commitments.

21:13 Looking at rental growth in a bit more detail. We continue to be encouraged by the improving rental growth outlook. In the first six months of the year, we generated an extra GBP 4,000,000 of rental income derived from our rent review activities, which resulted in annualized growth of 3.2%, which is slightly ahead of our previous guidance at 3%. Importantly, open market reviews delivered an uplift of 6.3% over the previous passing rent, and that outlook has continued to improve. The rent review teams across both businesses are now fully integrated and sharing evidence, which will benefit rental growth in the future, and none of that benefit is really reflected in the first six months results of this year.

22:01 That rental growth coming from a combined group will really fall into future periods.

22:10 We continue to focus on asset management and development activities, where we're seeing strong rental growth with asset management schemes delivering growth of around 15% from below £200 per square meter, increasing to around two twenty. Developments are seeing that increase even further to around £280 per square meter, which is an increase of around 30%.

22:35 All of these activities continue to set vital and important rental evidence, which will then apply across the wider portfolio. PHP has managed to achieve its thirtieth anniversary of consecutive dividend growth, and we continue to focus on this approach, supporting our progressive dividend policy on a fully covered basis. There are three key pillars to this growth: a portfolio with strong reversion potential that will deliver future rental growth supported by security of our long term, predominantly government backed income stream a strong focus on cost control with one of the lowest EPRA cost ratios in the whole sector and a strong record of balance sheet liability management with a low cost of debt, 3.8%, expected to fall further to 3.5% in the second half of this year.

23:36 These three pillars have supported the strong earnings growth in the first six months of this year. As we already said, earnings 3.8p, up 9% over the previous period. So I'm to hand you back to Mark, who will take a closer look at the group's property portfolio.

23:55 Thank you, Richard. Thanks for presenting the results. I think it's really, you know, a proud moment for you and I to present such, you know, strong results to the market. And the response that we've had from our investors in the last couple of weeks has been very, very positive. I'll now sort of take take you through the sort of property section of the presentation. I think in some ways, this is my favorite part because it sort of brings to life some of the really good things that we are doing. But importantly, you know, we we find a way of presenting to you the way in which we make a financial return on the investments that we are making. So I'm gonna start in Western Supermare. As you can see on the left hand side, this is a five story new development that we are currently building, and it it meets the requirements of a neighborhood health center, which is quite topical because the government has has committed to to doing 250 of these in the future, and, you know, we are very well placed to help government with that plan.

25:03 So the the benefits to PHP are, firstly, we are funding this through our existing joint venture, which which we which we have in place, and it's a very capital light way for us to, generate double digit returns on a £19,000,000 scheme, which has a twenty five year index or, sorry, inflation linked lease. The yield on cost for us and our shareholders is in excess of 8%. That's boosted by the management fees that we receive. We also get development management fees on this particular asset. And importantly, which, you know, refers back to the slide that Richard presented just now, It unlocks significant rental evidence well ahead of local averages.

25:58 So in Western Supermare and and in Somerset, generally, we own other assets

26:05 where often the rent is below £200 a square meter or certainly in the low 2 hundreds, and we're setting this, or or the the terms the economic terms on this asset, Western Super Mirror, in the high 2 hundreds. So that all all, you know, bodes very, very well. We know we have a strong reputation for

26:27 providing new purpose built medical centers. And I think this particular opportunity, I think, takes that on to a to another level because on the Ground Floor and the 1st Floor, in the picture in front of us, the the services provided from that space will be what I would describe the sort of typical or core GP surgeries that we we have 1,100 of those around the country. And then on the on the 3rd And 4th Floor, there will be social prescribing, other services, mental health, children services. This is exactly what the government is trying to achieve by getting those services out of hospitals into the community.

27:16 It'll save the government money. Well well placed to to work with government to achieve that goal. And we have the expertise, the knowledge, and obviously the relationships, and then access to, you know, capital with the the joint venture that we have with our established partner, USS. So lots to to look forward to, not just in Western Supermer when this scheme completes later in the year, but I think it sets a really, really helpful precedent to do more of these new neighborhood health centers all around the country in the future, for which we know there is very, very strong demand. And, of course, you know, we are getting a a very nice financial return on our capital investment along the way.

28:08 The next site I wanted to just sort of, you know, sort of showcase to you is in Tetbury in in Gloucestershire. This is a new purpose built medical center. I happened to visit this on the same day that I saw Western Supermere a few weeks ago. This is gonna be a really good scheme. I really liked it. There's a nice population. It's fairly sort of affluent part of the country. Population is growing. Regional house builder gets planning consent. The community is crying out for a new medical center, desperate in in in so many ways because of the growing and the aging population. We come in. The developer effectively gives us the land for free. We build the new medical center, which will complete either in December this year or January of next. We have a thirty year lease, all government backed, fixed rental uplifts, yield on cost in excess of 9%, total return well into the into mid to high teens from the fees that we will achieve. Again, we're unlocking vital rental evidence here well ahead of other assets that we own in this region, of which we we have many. And it's a great example of, you know, public private partnerships working together to create new medical centers, new medical facilities in line with the

29:38 government's ten year plan. And, again, this particular opportunity is gonna slot very nicely into our existing primary care joint venture. So, again, very sort of capital light from a PHP perspective, but generating very high returns. And there's more of those coming through in our pipeline, and and hopefully, when we talk to you next time, we'll get to to show you about that. The next slide is an asset management project in Wakefield in in Yorkshire. This is, in some ways, the other end of the extreme of what I've just described in that this is an asset we've owned for twenty five years, and we're very, very pleased and and proud of the historic success that we've achieved from owning this asset. I think at the time we originally bought the asset in 1998, The number of patients registered at the Trinity Medical Center in Wakefield was about 7,000 or less.

30:44 We now have 27,000 patients and growing. We are expanding the site principally through a £4,000,000 capital investment, adding 13 consulting rooms. Clinical procedures will be provided, including minor ops, out of hours, maternity, midwifery, and beyond. And, you know, we get a good return, you know, in excess of a 6% yield on cost, double digit total profit on cost, setting a positive rental tone, and it's a great story. This is effectively a neighborhood health center in everything but name. And, again, you know, good example of what we do, what we do best, generating good financial returns on the way through.

31:38 Now moving on to private hospitals. I described earlier the portfolio of private hospitals that we that we own, and we are very well progressed in forming a joint venture. So in the future, we will own a 50% stake in the private hospital portfolio from the point that that joint venture completes. We also have a capability within the business to develop new private hospitals, and there have been little few, in fact, almost no private hospitals built in The UK now for for many, many years. This is a new build project. In fact, myself and the team are going up there tomorrow to Peterborough for the topping out ceremony.

32:24 This is a brand new private hospital led to Ramsey who are one of the, you know, leading private hospital operators. This would principally be a facility to provide day case surgery, and it's it's introducing additional capacity into the local area where the demand is very, very high. Ramsay, across The UK and and and and particularly in in Peterborough, generate a lot of their revenue, a lot of their footfall from the NHS. In in Peterborough, it's expected to be in excess of of 80%.

33:09 So outpatient clinics here, diagnostic units, all the usual sort of day to day services that you would expect from a new private hospital. So tried and tested model. We've now developed six of these over the last ten years for Ramzi, and we believe that we will do more. On completion, we expect this asset to slot into the private hospital joint venture that I described earlier. So before I take the floor to questions, and there there seems to be quite a few questions coming in on screen, and and and many of you are kind to submit questions, in advance. If I could just sort of close the presentation by saying this has been a transformational period for our company.

33:58 The transaction objectives of putting PHP and and Assura together, are well on track. Many of the things that we have done, we've actually managed to achieve ahead of schedule. Synergies are pretty much materially delivered, at 92%, and integration substantially complete. Richard and his team have done a terrific job on the balance sheet side, and our deleveraging plan is well advanced. And the the remains of the bridging facility of 260,000,000 will be fully repaid in the next few weeks from the JV proceeds coming in. Dividend growth is, you know, fundamental to to the business, and we want to continue growing our dividend from the quality of the portfolio, the the tailwinds that we have, but the operational capability, and the scale benefits coming through, from the combination give us the confidence that we can be that continued income combounder, not just just now, but in the in the foreseeable future.

35:16 Our earnings growth is fundamentally supported by that operational excellence that we described earlier, and we see positive trend in rental growth, the ability to do more and enhance volume of asset management deals. We wanna do more of Wakefield's, not less. Of course, this management team will retain a very, you know, close control of costs. It's kind of in the in the DNA of the company. You know, we've worked hard to to get ourselves in this position, and, you know, we intend to to retain that strong position that we are in. And we're seeing a growing pipeline of opportunities in The UK, in Ireland, in primary care, and in private hospitals.

36:03 And we have the track record, the team, the capability, and the size and scale with a lower cost of capital post merger to be able to do all of that. So I'd like to thank you all for attending the presentation this afternoon, and I'm now gonna go on to questions. And I'm actually gonna start with the the questions that were submitted in advance. I can actually see now all questions that have come through to the management team. We might not get through all of these, but we will do our very best. So the first question that's been presubmitted, we can't actually see from where where's that who's actually submitted these questions, so so forgive us for not being able to address you directly.

36:53 But the first question is, has the takeover brought better than expected growth opportunities? I would say definitely yes. I think we were very optimistic about the merger of these two companies. It was a very obvious transaction to do. Both companies were very similar in size and scale, and the strategies were not wildly different. However, I just think by being twice the size, we got a lot of profile from the transaction that we did last year. I think that, by definition, has opened more doors to us. But I think it's the it's the team and the expertise and the capability that we have, some of which we perhaps underappreciated, particularly on the Asura side, which gives me the confidence that I can answer that question that, you know, we we we think there are better than expected growth opportunities from putting the two companies for PHP going forward.

37:53 Second question is what NAV multiple or yield is embedded in the USS 103,000,000 transfer at 82,000,000 net proceeds? Does that pricing read across to how the wider portfolio should be marked? I can I can address that question? The transaction hasn't completed yet, so you can appreciate there's some some commercial sensitivities, which which there always are. But I can say that the pricing of the of the asset is sort of a yield in the low fives. Our average portfolio yield is is 5.4%, so we think it's positive for you know, not the read across just for our wider portfolio, but just the market generally. But it's a good quality portfolio of assets that we're transferring into the joint venture, and, you know, the portfolio valuation very much reflects that.

38:52 Richard, would you mind picking up question three? I presume you can see that from your desk. Give me a bit of a break. Yes. Yes, sure. Yes. Thanks, Mark. So the question is, there are twelve eighty seven open market reviews outstanding at the end of June versus eleven fifty nine at December. And I read the rest of it, the general gist of it is, what wise it increase when district value settlements are increasing? There are approximately 3,500 leases across the wider portfolio, which have a three yearly rent review cycle. So really, at any one time, there should be approximately 1,200 reviews outstanding. The way the review cycles work, we quite often have a lot of reviews fully due at the June 30.

39:40 So the small increase is probably a reflection of the way reviews fall due, But I would expect around that sort of number to be outstanding at any one time just reflecting the short review cycle that we have in our sector, which is great because it does mean we get reversion on reviews that much more quickly. Thank you, Richard. Next question. Question is asset management rents being based to 218 to £279 per square meter. It's a portfolio average of 200. How much of the wider portfolio's revision potential is generally probable today versus reliant on a handful of recent settlements?

40:30 The the portfolio, as you've set out in your question, is is clearly highly reversionary. Management very focused on on the delivery of that reversion. The team are incentivized, motivated to to capture that gap. Principally, that's arisen as a consequence of, amongst other things, inflation over the last four to five years that we are to capture in the future. In terms of being able to to prove that today, we think that's that's, in some ways, the easy bit. The ability to to deliver that today, we think that's that's coming later because if the district value it to to work with and sometimes work against to persuade them that the, you know, economic rents that we see in the market principally from activities that we are doing and particularly the new developments that we described, you know, reaffirm that that potential.

41:41 So it it won't happen overnight, but we, you know, we do think that will come through in the future. And that that gap, it hasn't widened at all in the last year, but it also hasn't hasn't narrowed. And it's our job to do that, and we think we're well placed to to do that. Next question is, are disposals following integration of Assura portfolio nearly complete. Yes. Those two transactions that we described earlier, into our primary care joint venture and our private hospital joint venture are are close, very close, in fact, to completion. I do think as well if an extension to your question is do you think we'll sell other assets? I I believe we will.

42:34 Barriers to our sector are quite high in terms of barriers to entry, but we have seen some new entrants coming in, some local authority pension fund activity. You know, we have sold some assets into that space, but we think there's an opportunity to to sell more. I think it's good for us to recycle capital and for us to, you know, to be active, where we see good opportunities to to sell assets and and to redeploy that capital. We know our shareholders like us doing that. If nothing else, it it, you just reinforces portfolio valuation, and I think it's good good discipline. So even though these transactions are very close to completion, I think we'll I think we'll do more.

43:26 Next question is if gearing is is is is high, why not sell Ireland? That's that's quite quite an interesting question. It's not one that's come up in all our interactions in in recent times. We went into the Irish market ten years ago. It's been a great success, and, you know, we've got, you know, number one market share over there alongside KKR who are another, you know, leading owner of health care infrastructure assets in in Ireland. Look. I think we we the way we think about that is, you know, if we were if we were approached, you know, we'd obviously be happy to consider all possibilities.

44:14 We have a lower cost of capital in Ireland than we do in in in The UK, principally as a cons of consequence of of interest rates. And we see opportunities to scale that portfolio up. So maybe a, you know, a long response to a short question, but we, you know, we consider all possibilities. But at the moment, we're very focused on our priorities, which is to deliver the joint venture transactions and and the proceeds from that coming through to to pay down debt. The next question is a political question. Do you see any threats or opportunities arising from the recent change in in in PM? We've been asked that quite a bit on this roadshow so far.

45:02 It's too early to tell. Andy Burnham is a former health secretary, wasn't a health secretary for very long, a couple of years, I think, in total. So he understands the space. So what do we know? We we know that the ten year plan that was put in place last year, that the the new government will retain that plan, we believe, to move more patients, more services into the community from hospitals. In many ways, that's the Jeremy Hunt plan of 2016, became the West treating plan of 2025, and we believe the new secretary of state, Yvette Cooper, will continue with that strategy.

45:49 So that's all good. Beyond that, there's been quite a lot of talk, albeit headlines and not much on detail around the creation of a national care service. It's very very, you know, very early stage. We've we we don't know for sure what that really means. We can imagine the the concept of that. In a worst case scenario, it makes no difference to our business at all, so it's totally neutral. You know, in a best case scenario, it could be could be very positive. You know, when I described Western Super Bear earlier and the services being provided from that facility going forward. And it's not just, you know, GP surgeries, not just, you know, clinical services. It's it's beyond that. You know? It's it's leaning into social prescribing and, you know, could quite easily, you know, lean into social care. So we'll see.

46:51 Way too early to tell at this stage, but, you know, totally understand why why you'd ask that question. Richard, would you mind picking up the next question just to give me a short break? Yeah. Sure. Given the attractive fundamentals, virtually guaranteed rents, why do you think there haven't been more entrants into the space? There was probably a couple of points to flag here. We have actually seen a number of recent entrants into the sector, particularly pension funds for a number of organizations have been very attracted by the strong fundamentals, as you already pointed out, the guaranteed rents, government backed income and long leases. So we are seeing more interest. But the other thing to perhaps note is this is not a huge amount of stock that is traded in the market in any one year, so it's quite difficult for new entrants to acquire assets at scale.

47:51 And also having the sort of platform and dedicated team that we have that knows its way around the NHS and and the workings and and we know how to navigate it to deliver the best results for our shareholders. Yes. Good response, Richard. I mean, we we know, as you described, there's a lot of interest in our sector. I mean, last year, we saw KKR and and Stone Peak obviously trying to to come in. Barriage to entry, quite high because you wanna have a portfolio of size and scale, but also the expertise to to own, manage, and invest in these assets is is is is extremely unique. We just happen to be doing it for a long time, so we've got the, you know, the best in class platform.

48:43 I think the local authority pension funds who you can understand why they wanna get into it because it's a, you know, good return. It's very secure. And but we encourage more entrants into our into our space because that, you know, creates liquidity and investment, and that's kinda good for everybody, really. But we get to see everything that that moves because the, you know, the the the positioning we have in the market. I think this next question coming in, going back to Ireland. The Irish government is enjoying bumper tax receipts. There seems to be a political consensus there around developing premium local health care facilities. Totally agree with you on that. Are you constrained in The UK by the much more precarious funding position in which the government finds itself?

49:37 Look. Totally agree on the on the Irish side, And, you know, it's one of the reasons why we're, you know, we're very confident about the future prospects of our Irish business, and we want to do more. You know, we have the market leading primary care platform in Ireland, and, you know, we're doing some interesting things on the private side as well. So we think, you know, that will, you know, that will continue. Yeah. I mean, the UK government is, you know, you know, at the face of it quite, you know, capital constrained. But, of course, of the 30,000,000 of tax receipts that, you know, Rachel Reeves had had raised, the majority of that went into health care.

50:24 You know, 25,000,000,000 went into the NHS. Now we could have a debate amongst ourselves this afternoon about how wisely that money had been spent, and I think we probably all concur quite quickly that there would could have been better ways for the government to spend that money. So, you know, of the 220,000,000,000 of annual spend in the NHS, we we believe more should go into primary care. Primary care real estate is is well placed to support the government and actually save it money because the Dasey report concluded that every patient going into hospital is now costing the government £500, and a patient going into primary care is costing £50 a patient. So, you know, prevention over cure, moving people into primary care in spite of the precarious funding position that you've described that the government finds itself in. You know, we think that primary care will benefit both in The UK and in Ireland.

51:33 How the dynamics of the rent review DV process changing and why are rent reviews being finalized at a faster rate? So there's quite a lot been happening there. We've seen the DV system be effectively collapsed into into treasury. At the same time, we've seen NHS England consolidate into department for health. The ICBs who we work with very closely. Again, this consolidation there from '44 to '23. So put all that together. It's hard to imagine we're able to do anything quicker. The team's very optimistic and upbeat about their ability to to do more and accelerate what we're trying to achieve.

52:21 I don't believe that's come through yet, certainly in the results of the last six months, but it's all to go for. And those dynamics, are changing, and, certainly, the the structure that sits around what we do is changing. And, hopefully, that will lead to better efficiency than what we've seen in the past. I'm conscious where we're getting close to time now, so forgive me if I seem a little rushed because we've still got quite a few questions looking at the screen here. With an average worth of ten point four years, what percentage of your portfolio is suitable to rekey or lease with or without asset management opportunities? There's a good slide in the deck in the appendix which sort of sets some of that out. So if we may, we'll come straight back to you, afterwards to to point you in the right direction there to save you going through that slide to give me time to do the next few questions or final few questions. Is PHP progressing direct development outside of the JV?

53:21 The answer is yes. We are more than able to to do that, but we're getting better returns in the joint venture currently, principally because of fees. And the the JV has a very efficient cost of capital. Principia is a consequence of the very, you know, clear and and defined investment case and strategy that sits around the JV. So, no, PHP can progress direct development side side of the JV, but the the schemes that we've showcased to you today and off the back of these results are principally joint venture schemes. Next question, are you able to be clear on on when the hospital JV will occur, and where will the LTV settle. So maybe that question came in before I I said earlier that the private hospital JV, very important transaction for us, and we're very close now. We are not only in exclusive terms, which we which we came to quite some time ago.

54:30 We're very progressed in due diligence, and we can get that transaction done in a matter of weeks. So we're very, very close now, and the LTV will come down into the low fifties. Our policy is to have a loan to value of 40 to 50% LTV and a net debt EBITDA below nine and a half, and we think we'll be nine or or lower very soon. And that will give Rich and his team the opportunity then to achieve a strong investment grade credit and then do everything else we need to do in the debt market over the next three to five years. The final question, as we're approaching 02/30, given difficulty for new entrants to access assets, are you a likely acquisition target, and have you been approached?

55:21 Anything around approaches, as you can as you can appreciate, is is heavily regulated, and, you know, we're never able to comment even in a scenario where where where there's a a a live transaction. There's no doubt. You we've seen a flood of in infrastructure funds across Europe and around the globe, very attracted to this asset class where, you know, over 80% of our rent roll, 80% of our income is is state backed. You know, this is an infrastructure investment at a time that, you know, global infrastructure funds are raising billions and billions of pounds. So, I'm sure we'll be, you know, always of interest to, all types of investors.

56:13 Richard and and and my job day to day is persuading many of you on this call today and everyone that we meet day in, day out from retail investors to wealth managers to institutional investors in The UK and around the world to invest in our company. And, you know, as long as we continue to do that well, we've been a public company for thirty years, but I'm sure there's a lot of interest in our company in the future because of the platform that we have, but I don't think I can really say any more than that at this stage. But there's been a lot of consolidation and m and a in our sector, and I do think that will continue, I'm sure. It's twenty nine minutes past two.

57:00 I've been told I have to finish the meeting at half past, so I I didn't want to to finish before just thanking you all for for your interest in our company, for your for your support. We have a big retail following, and we really appreciate that. And we're grateful to you for dialing in this afternoon. Thank you for those questions. We thought they were very well thought through, and, hopefully, you feel, we've been able to address your questions. But the management team is very accessible, through the through the chat room or or contact us direct. Wishing you a good afternoon, and hope to see you very soon. Thanks very much.

57:46 Perfect. Thank you. Could I please ask investors not to close the session? It should now be automatically redirected to provide your feedback, which help the company better understand your views and expectations. On behalf of the management team of PRIMARY HEALTH PROPERTIES PLC, we would like to thank you for attending today's presentation, and good afternoon to you