Preliminary Results

About this update from Primary Health Properties Plc

[{"type":"text","content":"\n \n Primary Health Properties PLC \n Preliminary results for the year ended 31 December 2025 \n 30-year track record of dividend growth in a structurally growing sector \n Primary Health Properties PLC (\"PHP\", the \"Group\" or the \"Company\"), the UK's leading investor in critical healthcare infrastructure, announces its audited preliminary results for the year ended 31 December 2025. \n Mark Davies , Chief Executive Officer (\"CEO\") of PHP, commented: \n \"2025 was a transformational year for PHP, obtaining overwhelming shareholder and wider stakeholder support for the combination with Assura plc (\"Assura\") to create a £6 billion healthcare REIT invested in critical social infrastructure assets across the UK and Ireland which will deliver financial and strategic benefits to our stakeholders. Our immediate focus is on delivering the post-transaction objectives of reducing leverage back to our targeted range of 40% to 50%; delivering the £9 million of annualised synergies identified; and integrating the two businesses to achieve the best of both organisations. \n \"In a short space of time and ahead of schedule, we have delivered over 80% of the annualised transaction synergies and offers have been received from highly credible investors to establish a new strategic joint venture on our private hospital portfolio. Alongside this, we have agreed commercial terms with our existing joint venture partner on primary care assets to inject a portfolio of £103 million which will help to reduce leverage back to our targeted range. \n \"The NHS's 10-year Health Plan published in July 2025 is clearly positive for PHP. We welcome the Government's commitment to strengthening the NHS, particularly its emphasis on shifting more services to modern primary care facilities embedded in local communities, enhanced by the NHS Neighbourhood Rebuild programme announced in the Autumn Budget. This plays directly to our strengths and our long-standing partnerships across the NHS give us a strong foundation to support this transition and deliver value to our shareholders. \n \"We are encouraged by the improving rental growth outlook underpinned by the Group's primary care assets along with the solid trading performance from the recently acquired private hospital portfolio. Rental growth of 3.2% in 2025 was ahead of previous guidance and this trend has continued into 2026, with an annualised growth rate of 3.4% on rent reviews settled in the first two months. \n \"We have now achieved PHP's 30-year anniversary of consecutive dividend growth and approach the future with a dedicated determination to continue growing our dividend on a fully covered basis.\" \n FINANCIAL AND OPERATIONAL HIGHLIGHTS (which include only 4.5 months of the merged Group) \n \n \n \n \n  Income statement metrics \n \n \n Year to \n 31 December \n 2025 \n \n \n Year to \n 31 December \n 2024 \n \n \n Annual \n change \n \n \n \n \n Net rental income 1 \n \n \n £230m \n \n \n £154m \n \n \n +49% \n \n \n \n \n Adjusted earnings 1,2 \n \n \n £131m \n \n \n £93m \n \n \n +41% \n \n \n \n \n Adjusted earnings per share 1,2 \n \n \n 7.3p \n \n \n 7.0p \n \n \n +4% \n \n \n \n \n IFRS profit after tax for the year \n \n \n £119m \n \n \n £41m \n \n \n +190% \n \n \n \n \n IFRS earnings per share 2 \n \n \n 6.6p \n \n \n 3.1p \n \n \n +113% \n \n \n \n \n Dividends \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Dividend per share 4 \n \n \n 7.1p \n \n \n 6.9p \n \n \n +3% \n \n \n \n \n Dividend cover 1 \n \n \n 112% \n \n \n 101% \n \n \n \n \n \n \n \n Balance sheet and operational metrics \n \n \n 31 December \n 2025 \n \n \n 31 December \n 2024 \n \n \n Annual \n change \n \n \n \n \n Property portfolio \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Investment portfolio valuation (including JVs at share) \n \n \n £6.0bn \n \n \n £2.8bn \n \n \n +115% \n \n \n \n \n Contracted rent roll (annualised) 1 \n \n \n £342m \n \n \n £154m \n \n \n +122% \n \n \n \n \n Government-backed income 1 \n \n \n 76% \n \n \n 89% \n \n \n \n \n \n \n \n Weighted average unexpired lease term (\"WAULT\") 1 \n \n \n 10.8 years \n \n \n 9.4 years \n \n \n +1.4 years \n \n \n \n \n Occupancy 1 \n \n \n 99% \n \n \n 99% \n \n \n \n \n \n \n \n Net initial yield (\"NIY\") 1,6 \n \n \n 5.4% \n \n \n 5.2% \n \n \n +20bps \n \n \n \n \n Balance sheet \n \n \n \n \n \n \n \n \n \n \n \n \n \n EPRA NTA per share 1,3 \n \n \n 99p \n \n \n 103p \n \n \n -4% \n \n \n \n \n IFRS NTA per share 1,3 \n \n \n 98p \n \n \n 103p \n \n \n -5% \n \n \n \n \n Debt \n \n \n \n \n \n \n \n \n \n \n \n \n \n Average cost of debt 1 \n \n \n 3.7% \n \n \n 3.4% \n \n \n +30 bps \n \n \n \n \n Loan to value ratio 1 \n \n \n 57% \n \n \n 48% \n \n \n \n \n \n \n \n Weighted average debt maturity - drawn facilities \n \n \n 4.1 years \n \n \n 5.7 years \n \n \n -1.6 years \n \n \n \n \n Total undrawn loan facilities and cash 5 \n \n \n £571m \n \n \n £271m \n \n \n \n \n \n \n \n 1 Items marked with this footnote are alternative performance measures. Refer to the Glossary of Terms for a description of these measures and a reconciliation to the nearest statutory metric where appropriate. \n 2 See note 7, earnings per share, to the financial statements. Per share figures are presented on a basic basis. \n 3 See note 7, net asset value per share, to the financial statements. Adjusted net tangible assets (\"NTA\"), EPRA NTA, EPRA net disposal value (\"NDV\") and EPRA net reinstatement value (\"NRV\") are considered to be alternative performance measures. \n 4 See note 8, dividends, to the financial statements. \n 5 After deducting the remaining cost to complete contracted acquisitions, properties under development and committed asset management projects. \n 6 Increase in the net initial yield (\"NIY\") reflects the acquisition of Assura and change in the portfolio composition including private hospitals. \n TRANSFORMATIONAL ACQUISITION OF ASSURA \n \n \n \n \n ● \n \n \n Combination between PHP and Assura successfully delivered, creating a £6 billion healthcare REIT investing in critical healthcare infrastructure \n \n \n \n \n ● \n \n \n On track to deliver annualised synergies identified at the time of the merger of £9 million with £7.5 million or 83% of total annualised synergies already delivered since Competition and Markets Authority (\"CMA\") clearance, as integration moves forward at pace and the benefits of the combination are delivered for shareholders \n \n \n \n \n ● \n \n \n Good progress is being made on expanding the existing primary care joint venture and establishing a strategic joint venture for our private hospital portfolio, where we see exciting growth opportunities \n \n \n \n \n EARNINGS AND DIVIDENDS \n \n \n \n \n ● \n \n \n Adjusted earnings per share up 4% at 7.3 pence (2024: 7.0 pence) \n \n \n \n \n ● \n \n \n IFRS earnings per share increased to 6.6 pence (2024: 3.1 pence) reflecting non-cashflow gains arising on the valuation of the Group's property portfolio and interest rate derivatives \n \n \n \n \n ● \n \n \n Annualised contracted rent roll now stands at £342 million (2024: £154 million) with rent reviews and asset management in the year generating an additional £9 million of annualised income, an increase of just under 7% over the previous passing rent or over 3% on an annualised basis, which supports our positive rental growth outlook \n \n \n \n \n ● \n \n \n EPRA cost ratio 9.8% (2024: 10.1%), excluding Axis overheads and direct vacancy costs, representing one of the lowest in the UK REIT sector \n \n \n \n \n ● \n \n \n Quarterly dividends totalling 7.1 pence (2024: 6.9 pence) per share distributed in the year, a 3% increase, and fully covered \n \n \n \n \n ● \n \n \n Second quarterly dividend of 1.825 pence per share declared and payable on 8 May 2026, equivalent to 7.3 pence on an annualised basis and a 3% increase over the 2025 dividend per share, marking the start of the Company's 30th consecutive year of dividend growth \n \n \n \n \n \n \n \n The Company intends to maintain its strategy of paying a progressive, fully covered dividend \n \n \n \n \n NET ASSET VALUE AND PORTFOLIO MANAGEMENT \n \n \n \n \n ● \n \n \n EPRA Net Tangible Assets (\"NTA\") per share decreased by 4% to 99 pence (31 December 2024: 103 pence), as a result of shares issued in relation to the combination with Assura and transaction costs. Adjusted NTA, including the MtM benefit of fixed rate debt, currently stands at 104 pence per share \n \n \n \n \n ● \n \n \n IFRS NTA per share decreased by 5 % to 98 pence (31 December 2024: 103 pence) \n \n \n \n \n ● \n \n \n Property portfolio valued at £6.0 billion at 31 December 2025 (31 December 2024: £2.8 billion) reflecting a net initial yield of 5.4% (31 December 2024: 5.2%), increase in yield reflects the addition of the higher returning private hospital portfolio \n \n \n \n \n ● \n \n \n Revaluation surplus in the year of £48 million (2024: deficit £38 million), representing an increase of 0.8 % (2024: decrease of 1.4%) driven by a £72 million gain from rental growth and asset management, offset by a small NIY movement of 3 bps equivalent to around £24 million \n \n \n \n \n ● \n \n \n The portfolio's metrics continue to reflect the Group's secure, long-term and predictable income stream characterised by high occupancy at 99% (31 December 2024: 99%); long WAULT of 10.8 years (31 December 2024: 9.4 years); and 76% (31 December 2024: 89%) of income funded by government bodies with strategy to increase this within 80% to 90% target range \n \n \n \n \n ● \n \n \n The reversionary potential of the enlarged Group's primary care portfolio continues to remain strong with a current average rent of c.£200 psm (c.£20 psf) capable of being increased over time \n \n \n \n \n ● \n \n \n New asset management and development projects are starting to see rents being rebased to an average of £218 psm and £277 psm respectively, which make these schemes economically viable, providing crucial evidence to support our rent review activities across the wider portfolio in the future \n \n \n \n \n ● \n \n \n Private hospitals and Ireland now comprise 13% and 6% respectively of the enlarged Group's portfolio with both markets offering strong and attractive growth opportunities together with the continued need for significant investment required into healthcare infrastructure to support the governments and NHS's 10-year plan objectives. \n \n \n \n \n FINANCIAL MANAGEMENT \n \n \n \n \n ● \n \n \n Strong support from the debt and credit markets for the combination with the refinancing of Assura debt facilities, subject to change of control clauses, now complete providing the enlarged Group with significant undrawn liquidity headroom, after capital commitments, of £571 million \n \n \n \n \n ● \n \n \n Weighted average cost of debt of 3.7% (2024: 3.4%) and debt maturities of just over four years \n \n \n \n \n ● \n \n \n Net debt drawn at 31 December 2025 of £3.4 billion out of total debt facilities of £4.0 billion comprising £1.5 billion (37%) of PHP secured facilities and £2.5 billion (63%) of unsecured facilities including the bridging loan provided to finance the combination with Assura \n \n \n \n \n ● \n \n \n LTV ratio 57% (31 December 2024: 48%), temporarily above the Group's targeted range of between 40% to 50% because of the combination, with a clear plan to reduce this during 2026 \n \n \n \n \n ● \n \n \n Well placed to continue delivering shareholder returns as combination has brought a deeper capability set, larger pipeline and more opportunities \n \n \n \n \n   \n Presentation and webcast: \n A virtual presentation for analysts and investors will be held on 17 March 2026 at 9.00am (11.00am SAST) via a live webcast and conference call facility. Following the presentation there will be a managed questions and answers session. \n The presentation will be accessible via live video webcast and a live conference call facility: \n Webcast:   https://brrmedia.news/PHP_FY_25 \n Telephone: UK-wide: +44 (0) 33 0551 0200 \n Telephone: South Africa toll free: 0 800 980 512 \n Password:  Quote \"PHP Results\" when prompted \n A recording of the webcast will be made available from c.1.00pm UK time (3.00pm SAST) on 17 March 2026 on the PHP website,  https://www.phpgroup.co.uk/ . \n For further information contact: \n \n \n \n \n Mark Davies \n CEO \n Primary Health Properties PLC \n \n \n Richard Howell \n CFO \n Primary Health Properties PLC \n \n \n \n \n \n \n \n \n \n \n \n \n David Purcell \n Investor Relations \n Primary Health Properties PLC \n T: +44 (0) 7921 190 136 \n E: [email protected] \n   \n \n \n Sodali & Co \n Financial PR \n Elly Williamson/Louisa Henry/Saskia Bottomley \n T: +44 (0) 207 250 1446 \n E: [email protected] \n \n \n \n \n \n \n \n \n \n   \n Notes to editors \n PHP is the UK's leading investor in modern healthcare infrastructure with a £6 billion portfolio invested in critical social assets across the UK and Ireland. The portfolio benefits from highly resilient operating metrics in a sector with strong fundamental demographic characteristics, supported by a positive political backdrop and the need for greater investment in healthcare infrastructure to support the delivery of services in local communities. \n In 2025, PHP combined with Assura to create the UK's largest healthcare REIT placing the enlarged Group in the top quartile of the London Stock Exchange FTSE 250 index with the additional benefits of significantly increased share liquidity, investor reach and a lower cost of capital. PHP's unique portfolio, strong platform with a robust balance sheet and a disciplined focus rental growth and cost control supports our 30-year track record of paying an increased progressive dividend . \n \n \n   \n Chair's statement \n 2025 was a transformational year for PHP, obtaining overwhelming shareholder and wider stakeholder support for the combination with Assura plc (\"Assura\") to create a £6 billion healthcare REIT invested in critical social infrastructure across the UK and Ireland which will deliver material financial and strategic benefits to stakeholders in the future. \n I am delighted to welcome former Assura shareholders to the enlarged Group and the resulting increase in the Company's market capitalisation places PHP in the top quartile of the London Stock Exchange FTSE 250 with the additional benefits of significantly increased share liquidity, investor reach and a lower cost of capital. \n We are pleased to have produced such a good set of results despite the time spent by the business on the transaction, and continue to deliver on our track record of continuous dividend growth, which now enters the 30 th consecutive year, highlighting the benefit of PHP's long-standing disciplined approach to managing our portfolio, balance sheet and cost base. \n The performance in the year is a testament to the quality of PHP's business model, portfolio and management team. I am proud of how colleagues across the newly enlarged business have collaborated together in the short period since the Competition and Markets Authority (\"CMA\") review concluded at the end of October. We recognise that the future success of the Group depends on our people and I would again like to warmly thank all our employees and the Board for their continued commitment, dedication and professionalism. \n Future strategy and financial framework \n The combination with Assura has created a UK REIT of significant scale and liquidity with a portfolio of long-leased, sustainable infrastructure assets principally let to government tenants and leading UK healthcare providers, benefiting from high income security, longevity, diversity of assets, geography and broad mix of rent review types. \n To support the combined Group's progressive dividend policy, paid on a quarterly basis, we have set out our future strategy and financial framework which will focus on: \n ·     80% to 90% government backed income target with new or regeared leases typically in excess of 20 years; \n ·     Organic rental growth greater than 3% to deliver sector leading, risk adjusted total property returns; \n ·     Risk controlled and capital light asset management and development projects; \n ·     Targeting a strong investment grade credit rating of BBB+ or better; \n ·     LTV target of 40% to 50%; \n ·     Net debt : EBITDA target of less than 9.5x; \n ·     Interest cover target of greater than 2.5x net rental income, with more than 90% of debt fixed or hedged; and \n ·     Strong control on costs and overheads, with one of the lowest EPRA cost ratios in the sector at below 10%. \n Our immediate focus is now on delivering the post combination objectives of reducing leverage back to our targeted range, delivering the £9 million of annualised cost synergies identified and integrate the two businesses effectively, combining their respective strengths to deliver the best of both organisations. \n Joint ventures and disposals \n A full portfolio review is currently ongoing and as previously reported we aim to establish new strategic joint ventures and deliver further disposals to achieve our goal to reduce leverage back to our targeted range of 40-50% and optimise shareholder returns. \n We continue to make good progress regarding opportunities to expand our existing joint venture, where we have agreed terms to transfer a further £103 million of assets from our primary care portfolio. Additionally, we have received four offers, from highly credible investors, to establish a new strategic joint venture on our private hospital portfolio. We are excited about the prospect of continuing to build a new strategic joint venture of size and scale which will bring financial benefits to all parties while supporting investment in critical healthcare infrastructure and generating positive social impact across the UK. \n Following completion of the combination with Assura the enlarged Group has sold four non-core assets for £8.3 million. \n Combination with Assura \n On 12 August 2025, PHP obtained control of Assura with 63% of shareholders accepting our shares and cash offer, which subsequently increased to 98% before the offer was closed on 10 September 2025. The acquisition of Assura completed in full on 20 October 2025 when the final 2% of Assura shares were legally acquired, and Phase 1 clearance from the CMA was received on 29 October 2025 which enabled integration of the two businesses to commence. \n In the short space of time since CMA clearance, we have made strong progress and delivered annualised cost synergies totalling £7.5 million or 83% of the target, which has been achieved primarily through a reduction in people costs and elimination of duplicated professional fees. These synergies do not include any potential reductions in the enlarged Group's cost financing. \n The fair value of the total consideration paid for the acquisition of Assura was just under £1.6 billion, funded through the issue of 1.26 billion new ordinary shares of 12.5 pence each, at a fair value, equivalent to £1,171 million, cash consideration of £407 million and transaction costs including stamp duty of £42 million. \n Operational performance \n Throughout 2025 we have continued to focus on and deliver a strong and resilient operational performance, reflecting the security and longevity of our income, which are important drivers of our predictable, growing income stream and underpin our progressive dividend policy. \n We have maintained our strong operational property metrics, with high occupancy at 99% (31 December 2024: 99%) and a long weighted average unexpired lease term (\"WAULT\") of 10.8 years (31 December 2024: 9.4 years). Following the combination, 76% (31 December 2024: 89%) of the Group's rent is currently funded directly or indirectly by the UK and Irish governments, with a further 13% funded by strong and well established private hospital operators who continue to experience improving operational performance at our assets. \n The value of the property portfolio, including our share of joint ventures, now stands at £6.0 billion (31 December 2024: £2.8 billion) across 1,142 assets (31 December 2024: 516 assets), including 28 assets in Ireland, with a total rent roll of £342 million (31 December 2024: £154 million). \n It is pleasing to report that the portfolio generated a valuation surplus of £48 million (2024: deficit of £38 million), reflecting gains of approximately £72 million (2024: gain of £63 million) arising from rental growth and asset management activity, partially offset by a deficit of £24 million (2024: deficit of £101 million) as a result of yield expansion of 3 bps (2024: 17 bps), primarily due to small adjustments to align the valuation approach across the enlarged portfolio. Following a stabilisation of primary care valuation yields in the second half of 2024, these have continued to remain broadly flat in 2025 with a small uptick in transaction volumes. The portfolio's average lot size has remained broadly unchanged at £5.3 million (31 December 2024: £5.3 million). \n The reversionary potential of the enlarged Group's primary care portfolio continues to remain strong with a current low average rent, subject to open market reviews, of c.£200 psm. New asset management and development projects are starting to see rents being rebased to an average of £218 psm and £277m psm respectively, to make these schemes economically viable, providing crucial evidence to support our rent review activities across the wider portfolio. In 2025, rent reviews and asset management generated an extra £9.1 million (2024: £4.0 million) of annualised rental income . \n We continue to focus on driving rental growth and unlocking the reversionary potential from our enhanced rent review, asset management and development capabilities. The integration of the two teams will achieve the best of both and unlock further opportunities in the UK and Ireland across primary and private healthcare markets. \n Overview of results \n Adjusted earnings increased by £38 million or +41% (2024: +£2 million or +2.4%) to £131 million (2024: £93 million). The significant increase reflects just under five months of additional income arising from the combination with Assura portfolio, along with the solid performance of the underlying portfolio driven by organic growth from rent reviews and asset management activity in the year. Using the weighted average number of shares in issue in the year, the adjusted earnings per share increased to 7.3 pence (2024: 7.0 pence), an increase of 4.3% (2024: +2.9%). \n A revaluation surplus of £48 million (2024: deficit of £38 million) was generated in the year from the portfolio, equivalent to 2 pence (2024: deficit of 3 pence) per share. \n Profit after tax as reported under IFRS rose to £119 million (2024: £41 million). \n EPRA NTA reduced by 4% to 99 pence per share (31 December 2024: 103 pence). The combination with Assura impacted the EPRA NTA by 6 pence per share, reflecting the effects of the share exchange ratio and transaction costs incurred. On an underlying basis, a 2 pence per share uplift was delivered from the positive portfolio revaluation. Including the MtM benefit of fixed rate debt of 5 pence per share, Adjusted NTA stands at 104 pence.   \n The Group's balance sheet remains robust, with significant liquidity headroom, with cash and collateralised undrawn loan facilities, after capital commitments, totalling £571 million (31 December 2024: £271 million). The loan to value ratio of 57% (31 December 2024: 48%) is currently higher than our targeted range of between 40% and 50%, as a result of the combination with Assura, but as noted above, we have a clear plan to bring this back within the targeted range during 2026. \n Dividends \n The Company distributed a total of 7.1 pence per share in 2025 which was fully covered, an increase of 2.9% over the 2024 dividend of 6.9 pence per share. The total value of dividends distributed in the year increased by 27% to £117 million (2024: £92 million), which were fully covered by adjusted earnings. During 2025, the scrip dividend scheme continued to be suspended as a consequence of the ongoing weakness in the share price and a Dividend Reinvestment Plan continued to be offered in its place. \n The first interim dividend of 1.825 pence per share, equivalent to 7.3 pence on an annualised basis, an increase of 2.8% over the 2025 rate, was paid on 13 March 2026 and the second is payable on 8 May 2026 to shareholders on the register at 27 March 2026. Both dividends represent a Property Income Distribution of 1.325 pence and an ordinary dividend of 0.5 pence. \n The Company intends to maintain its strategy of paying a progressive dividend, paid in equal quarterly instalments, that is covered by adjusted earnings in each financial year. Further dividend payments are planned to be made on a quarterly basis in May, August and November 2026 which are expected to comprise a mixture of both Property Income Distribution and normal dividend. It is proposed that authority will be sought at the AGM for the re-introduction of the scrip dividend for future dividends, at the Directors' discretion. \n Board changes \n We were delighted to welcome Jonathan Davies to the Board following his appointment as an independent Non-executive Director effective from 1 December 2025. Jonathan brings a deep understanding of the sector and Assura's business, having served as its Senior Independent Director and, latterly, Chair, providing the Company's stakeholders with continuity during the integration period and beyond. \n Johannesburg Stock Exchange (\"JSE\") secondary listing \n During the year, the Company continued to build on the growing interest in the Company and its profile in the South African market, where investors have shown strong interest in the combination with Assura and the Group's unique healthcare property investment opportunity. Since joining the JSE in October 2023, the secondary listing has helped contribute to liquidity in the Group's shares and as at 31 December 2025, approximately 49 million shares or 2% (31 December 2024: 14 million or 1%) of the register is now listed on the JSE. We continue to help potential South African investors acquire PHP shares and provide further liquidity on the JSE with the objective of increasing the number of shares listed there to between 5% and 10% of the Group's total issued share capital. \n Environmental, Social and Governance (\"ESG\") \n PHP has a strong commitment to responsible business and ESG matters are at the forefront of the Board's and our various stakeholders' considerations. PHP published in 2022 a Net Zero Carbon (\"NZC\") Framework setting out the five key steps we are taking to achieve a target of being NZC by 2030. However, the combination with Assura and significant increase in the scale of the portfolio means now is the right time to review appropriate targets. Consequently, we will revisit both PHP's NZC Framework and Assura's NZC Pathway, including Science Based Targets initiative targets, over the course of 2026. \n During 2025, we continued to progress the delivery of our original NZC Framework, achieving net zero operations for the third year in succession and the Group completed three NZC developments at Croft, West Sussex; South Kilburn, London; and an NHS children's therapy centre at Fareham, Hampshire. \n We continue to modernise existing buildings and improve the environmental credentials of our portfolio through the asset management programme. As at 31 December 2025, 63% of assets have an EPC rating of A or B (31 December 2024: 47%) and 93% at A to C (31 December 2024: 88%). \n As a leading provider of modern primary care premises, we aim to create a lasting positive social impact, particularly on the health outcomes and wellbeing in the communities where we are invested. We believe that our activities benefit not only our shareholders but also our wider stakeholders, including occupiers, patients, the NHS and HSE, suppliers, lenders and the wider communities in both the UK and Ireland. \n Further details on our progress in the year, objectives for the future and approach to responsible business can be found in our Responsible Business Report. \n Healthcare market update and outlook \n The UK Government's 10-year plan for the NHS in England was launched in July 2025 to create a new model of care fit for the future, setting out three radical shifts - from hospital to community, analogue to digital, and sickness to prevention. \n ·     The move from hospital to community will be delivered through a \"neighbourhood health service\" that will join up multiple services through local teams to make them patient focused, accessible and, in time, offer predictive and preventative care, anticipating need rather than reacting to it.  \n ·     The move to digital will be through the NHS app to improve patient access to services and control their data in a single patient record. \n ·     The move from sickness to prevention will include an ambition to end obesity, incentivisation of healthier choices, better support for people to find and stay in work, an expansion of mental health support and increased use of genomics to enable intervention for people at high risk of developing disease. \n There is a clear theme of reducing the reliance on hospitals and an accompanying commitment to shift expenditure away from expensive hospital care.  Consequently, the plan should be a catalyst for unlocking significant future opportunities in primary care and community diagnostics. \n In support of the shift from hospital to community, the plan outlines the development of neighbourhood health centres (\"NHC\") in every community acting as a \"one stop shop\" for patient care and the place from which multidisciplinary teams operate.  The objective of NHCs is to create an offer that meets population needs holistically by co-locating NHS, local authority and voluntary sector services, bringing historically hospital based activities such as diagnostics, post-operative care and rehabilitation into the community. They should also offer a variety of services such as smoking cessation, weight management, employment support and debt advice providing convenient access to services, particularly for those with complex needs, and supporting more integrated working by healthcare and allied professionals. Importantly, much of the existing UK primary care infrastructure is incapable of facilitating these broad, multi-disciplinary services in the community. \n The creation of NHCs will therefore mandate the improved utilisation of existing assets and the delivery of new premises. The plan recognises that private capital, including third-party development, will be essential to the delivery of the new estate and this was enhanced by the announcement of the NHS Neighbourhood Rebuild Programme in the Autumn 2025 Budget. \n PHP is strategically well placed to assist and support the Government and NHS with the NHC programme by enhancing its existing estate through both the Group's pro-active asset management and development activities. \n Investment market update \n Primary care asset values have continued to perform well relative to mainstream commercial property due to recognition of the security of their government backed income, crucial role in providing sustainable healthcare infrastructure and more importantly a stronger rental growth outlook enabling attractive reversion over the course of long leases. As a result, we have continued to see a pick-up in transaction volumes in the UK, across both primary care and private hospital markets, which are supportive of our property valuations and give us confidence in our ability to complete our deleveraging objectives in the short term. \n Yields adopted by the enlarged Group's valuers have remained stable in 2025, moving out by only 3 bps to 5.4%, primarily as a result of small adjustments to align the valuation approach across the enlarged portfolio . We believe the sector has reached an inflexion point with future rental growth driving positive performance in the future. \n PHP outlook \n The immediate focus of the business is on delivering the strategic benefits and priorities following the combination with Assura: managing leverage through moving assets into joint ventures or sales, integrating the two businesses and continuing to deliver cost synergy benefits, and refinancing the acquisition facilities. \n PHP has delivered another year of strong operational and financial performance with a focus on driving rental growth from our existing assets, and we are encouraged by the firmer tone of rental growth experienced over the last couple of years. We believe the dynamics of inflation in recent years, including significantly increased build costs combined with demand for new primary care facilities and the need to modernise the estate, will continue to drive future rental growth, and we are starting to see the evidence of this through our asset management and development pipelines. \n Our portfolio has very resilient operating metrics in a healthcare market with strong fundamental demographic characteristics, supported by a supportive political backdrop and the need for greater investment in healthcare infrastructure to support the delivery of services in local community settings. PHP has a unique portfolio, strong operational platform and skill-set across primary care in the UK and Ireland with attractive future growth opportunities focused around private hospitals and adjacent healthcare assets. \n These factors give us confidence in our ability to continue to generate attractive shareholder returns which, combined with our disciplined strategy and financial framework, support our progressive dividend policy and enable us to look forward to 2026 and beyond with confidence. \n   \n   \n Harry Hyman \n Non-executive Chair \n 16 March 2026 \n \n \n   \n Business review \n 2025 has been a very active and transformational year following the combination with Assura; adding £3.0 billion of assets with a rent roll of £182 million per annum. The combination provides a significant increase in the Group's scale with a property portfolio entirely focused on critical social healthcare infrastructure. \n The increased scale resulting from the Assura merger provides the Group with a lower cost of capital and more scope to drive and improve the organic income growth that can be derived from the portfolio. We are targeting rental growth in the future in excess of 3% per annum to continue to deliver sector-leading, risk-adjusted total property returns. \n The Assura portfolio increased our exposure to private hospitals and post year-end we have progressed negotiations with offers received from four credible counterparties to put this portfolio into a new strategic joint venture to help reduce the Group's leverage back to the target range of 40% to 50% and a government-backed income target of 80% to 90%. \n Rental growth \n PHP's sector-leading metrics remain robust and we continue to focus on delivering organic rental growth derived from our portfolio of secure income assets. This growth arises mainly from rent reviews and asset management projects (extensions, refurbishments and lease re-gears), which provide an important opportunity to increase income, extend lease terms and create value. Enhancing our assets ensures that they continue to meet their communities' healthcare needs, often improving their ESG credentials and ensure they also play a crucial role in helping the NHS fulfil its 10-year plan. \n Throughout 2025, we continued to see strong organic rental growth from both our existing and the newly acquired Assura portfolio on a like-for-like basis, with rent roll, increasing by £9.1 million or 2.7% (PHP: £4.1 million or 2.6%; Assura: £5.0 million or 2.8%). The improving rental growth outlook seen over the last couple of years has continued and it should be noted that most of the increase comes from rent reviews arising primarily in the periods prior to 2023, a period when rental growth was muted and did not reflect the higher levels of construction cost and general inflation experienced in recent years. \n We have also seen the improving rental growth outlook reflected in the valuation of the portfolio, with the independent valuers' assessment of estimated rental values (\"ERV\") subject to open market reviews increasing by 2.7% in 2025 (2024: 3.2%). \n Rent review performance \n The enlarged Group completed 665 (2024: 341) rent reviews with a combined rental value of £122 million (2024: £42 million), adding £8 million and delivering an average uplift of 6.8% against the previous passing rent (2024: £3 million/7.7%). \n 60% of our rents are reviewed on an open market basis, which typically takes place every three years. The balance of the portfolio has either indexed (34%) or fixed uplift (6%) based reviews which also provide an element of certainty to future rental growth within the portfolio. Approximately 50% of index-linked reviews, including private hospitals, in the UK are subject to caps and collars which typically range from 6% to 12% over a three-year review cycle. \n Reviews in Ireland and relating to the private hospital portfolio performed very strongly, both adding over £1 million to rent roll respectively. In the private hospital portfolio, an uplift of 3.2% over the previous passing rent was achieved on 20 indexed-based reviews, which are annual reviews subject to collars and caps which typically range from 1.5% to 4% per annum. \n In Ireland, this related to 25 index-based reviews (2024: 12) with an uplift of 20.9% (2024: 15.3%) against the previous passing rent. Irish rent reviews generally occur every five years, linked to the Irish Consumer Price Index, and are upwards and downwards typically with a cap of 25% over a five-year cycle. \n The growth from reviews completed in the year, noted above, is summarised below: \n \n \n \n \n Review type \n \n \n Number \n \n \n Previous rent \n (per annum) \n £m \n \n \n Rent increase \n (per annum) \n £m \n \n \n Percentage \n increase     total \n \n \n Percentage \n increase annualised \n \n \n \n \n Primary care - open market 1 \n \n \n 324 \n \n \n 42 \n \n \n 2.7 \n \n \n 6.5% \n \n \n 2.1% \n \n \n \n \n Primary care - indexed \n \n \n 249 \n \n \n 33 \n \n \n 3.1 \n \n \n 9.4% \n \n \n 4.6% \n \n \n \n \n Primary care - fixed \n \n \n 47 \n \n \n 8 \n \n \n 0.4 \n \n \n 4.8% \n \n \n 2.1% \n \n \n \n \n Primary care - total \n \n \n 620 \n \n \n 83 \n \n \n 6.2 \n \n \n 7.5% \n \n \n 3.1% \n \n \n \n \n Private hospitals - indexed / fixed \n \n \n 20 \n \n \n 34 \n \n \n 1.1 \n \n \n 3.2% \n \n \n 3.2% \n \n \n \n \n UK - total \n \n \n 640 \n \n \n 117 \n \n \n 7.3 \n \n \n 6.2% \n \n \n 3.1% \n \n \n \n \n Ireland - indexed \n \n \n 25 \n \n \n 5 \n \n \n 1.0 \n \n \n 20.9% \n \n \n 4.1% \n \n \n \n \n Total - all reviews \n \n \n 665 \n \n \n 122 \n \n \n 8.3 \n \n \n 6.8% \n \n \n 3.2% \n \n \n \n \n 1    Includes 36 reviews (2024: 35) where no uplift was achieved. \n At 31 December 2025, 1,159 (31 December 2024: 600) open market rent reviews representing £169 million (31 December 2024: £89 million) of passing rent, were outstanding, out of which 575 (31 December 2024: 326) have been triggered to date. These reviews are expected to add another £5.1 million (31 December 2024: £2.7 million) to the contracted rent roll when concluded, representing an uplift of 5.9% (31 December 2024: 5.5%) against the previous passing rent. The balance of the outstanding reviews will be actioned when there is further comparative evidence to support the estimated rental values. \n The large number of outstanding reviews reflect the requirement for all awards to be agreed with the District Valuer. A great deal of evidence to support open market reviews comes from the completion of historical rent reviews and the rents set on delivery of new properties into the sector. Recent asset enhancement projects and new build developments have shown a willingness of the District Valuer to accept higher rent levels, and whilst this is encouraging, further progress is still required. \n Asset management projects \n The enlarged Group continues to progress an advanced pipeline of 51 projects which highlight the improving rental growth outlook, with the current weighted average rent of £189 psm due to increase by around 15% to £218 psm post completion. These projects provide important evidence for future rent review settlements across the wider portfolio. \n In the UK, across both PHP and Assura portfolios, we exchanged on eight (2024: ten) new asset management projects, 21 (2024: eight) lease re-gears and 20 (2024: seven) new lettings during 2025. These initiatives will increase rental income by £0.8 million, investing £5.0 million and extending the leases back to an average of 17 years for the asset management projects. \n The Company will continue to invest capital in a range of physical extensions or refurbishments through asset management projects which help avoid obsolescence, including improving energy efficiency, and which are key to maintaining the longevity and security of our income through long term occupier retention, increased rental income and extended occupational lease terms, adding to both earnings and capital values. \n Valuation and returns \n In the year, we have continued to see values stabilise with yields flat and the impact of rental growth delivering valuation growth. We expect this trend to continue in 2026. \n As at 31 December 2025, the Group's portfolio comprised 1,142 assets (31 December 2024: 516) independently valued at £6.0 billion (31 December 2024: £2.8 billion), including the Group's share of joint ventures. After allowing for acquisition costs and capital expenditure on developments and asset management projects, the portfolio generated a valuation gain of £48 million or 0.8% (2024: deficit of £38 million or -1.4%). \n During the second half of the year, the Group's portfolio net initial yield (\"NIY\") was flat, albeit the overall yield increased to reflect the change in portfolio composition, including the private hospital portfolio, following the acquisition of Assura to stand at 5.4% (31 December 2024: 5.2%), and the true equivalent yield is 5.7% at 31 December 2025 (31 December 2024: 5.3%). The movement of yields created a deficit of approximately £24 million, but this has been outweighed by gains of approximately £72 million arising from an improving rental growth outlook and asset management projects. \n The movement in the portfolio's valuation deficit is summarised in the table below: \n \n \n \n \n £ million \n \n \n H1 2025 \n \n \n H2 2025 \n \n \n FY 2025 \n \n \n \n \n NIY expansion \n \n \n (£9m)/+3bps \n \n \n (£15m)/0 bps \n \n \n (£24m)/+3 bps \n \n \n \n \n Rental growth \n \n \n £29m \n \n \n £43m \n \n \n £72m \n \n \n \n \n Total surplus \n \n \n £20m \n \n \n £28m \n \n \n £48m \n \n \n \n \n We continue to see evidence of an improving market for healthcare real estate both in the UK and Ireland which are increasingly viewed as attractive social infrastructure assets with a growing rental income stream which is secure, long and predictable. There are new pools of capital looking at the asset class including global infrastructure funds, pension funds and life assurance companies, most of whom manage large pools of capital at a lower cost of capital. This improved liquidity is likely to enhance asset valuations in the future. \n The total property returns generated by the portfolio in the period are set out below: \n \n \n \n \n \n \n \n \n \n \n Year ended \n 31 December 2025 \n \n \n Year ended \n 31 December 2024 \n \n \n \n \n Income return \n \n \n \n \n \n 5.7% \n \n \n 5.5% \n \n \n \n \n Capital return \n \n \n \n \n \n 1.3% \n \n \n (1.3%) \n \n \n \n \n Total return \n \n \n \n \n \n 7.0% \n \n \n 4.2% \n \n \n \n \n   \n \n \n   \n The portfolio's average lot size remained at £5.3 million (31 December 2024: £5.3 million), with 85% of the portfolio (31 December 2024: 88%) valued at over £3.0 million. \n \n \n \n \n \n \n \n Number of properties \n \n \n Valuation \n £ million \n \n \n % \n \n \n Average lot size \n£ million \n \n \n \n \n >£10m \n \n \n 131 \n \n \n 2,217 \n \n \n 37 \n \n \n 17 \n \n \n \n \n £5m-£10m \n \n \n 244 \n \n \n 1,636 \n \n \n 28 \n \n \n 7 \n \n \n \n \n £3m-£5m \n \n \n 312 \n \n \n 1,209 \n \n \n 20 \n \n \n 4 \n \n \n \n \n £1m-£3m \n \n \n 417 \n \n \n 844 \n \n \n 14 \n \n \n 2 \n \n \n \n \n <£1m (including land £4m) \n \n \n 38 \n \n \n 31 \n \n \n <1 \n \n \n <1 \n \n \n \n \n Total 1 \n \n \n 1,142 \n \n \n 5,937 \n \n \n 100 \n \n \n 5.3 \n \n \n \n \n 1 Excludes the £13 million impact of IFRS 16 Leases with ground rents recognised as finance leases. \n Robust portfolio metrics \n The portfolio's annualised contracted rent roll at 31 December 2025 was £342 million (31 December 2024: £154 million), with the majority of the increase (£182 million) relating to the acquisition of Assura. The remainder of the increase was driven by organic rent reviews and asset management totalling £4 million and additions of £1 million, as well as £1 million of foreign exchange benefit on the portfolio in Ireland. These increases were offset by £1 million relating to disposals and tenant expiries. The rent roll includes £3 million which represents PHP's share of properties held in joint ventures. \n The security and longevity of our income are important drivers of our secure, long term predictable income stream and enable our progressive dividend policy. \n Security: PHP continues to benefit from secure, long term cash flows with 76% (31 December 2024: 89%) of its rent roll funded directly or indirectly by the NHS in the UK or HSE in Ireland. The portfolio also benefits from a consistently high occupancy rate of 99% (31 December 2024: 99%). \n Longevity: The portfolio's WAULT at 31 December 2025 was 10.8 years (31 December 2024: 9.4 years). £58 million or 17% of our income is currently holding over or expires over the next three years, of which c.75% have agreed terms or are in advanced discussions to renew their lease. £157 million or 46% expires beyond ten years. The table below sets out the current lease expiry profile of our income: \n \n \n \n \n Income subject to expiry \n \n \n £ million \n \n \n % \n \n \n \n \n Holding over 1 \n \n \n 16 \n \n \n 5 \n \n \n \n \n <3 years \n \n \n 42 \n \n \n 12 \n \n \n \n \n 4-5 years \n \n \n 45 \n \n \n 13 \n \n \n \n \n 5-10 years \n \n \n 81 \n \n \n 24 \n \n \n \n \n 10-15 years \n \n \n 57 \n \n \n 17 \n \n \n \n \n 15-20 years \n \n \n 42 \n \n \n 12 \n \n \n \n \n >20 years \n \n \n 59 \n \n \n 17 \n \n \n \n \n Total \n \n \n 342 \n \n \n 100 \n \n \n \n \n 1 Given the unique nature of the portfolio, growing demand and low supply it is extremely unlikely that the occupiers will not renew their lease. \n \n \n   \n Ireland \n At 31 December 2025, the portfolio in Ireland comprised 28 standing and fully let properties which includes three developments currently on site, valued at £341 million or €391 million (31 December 2024: 21 assets/£255 million or €309 million). The portfolio in Ireland has been valued at a NIY of 5.1% (31 December 2024: 5.0%) and a true equivalent yield of 5.3% (31 December 2024: 5.3%) reflecting the acquisition of the Assura Irish assets. \n PHP continues to see significant growth opportunities in Ireland, driven by sustained Government investment in healthcare infrastructure and a strategic shift towards community-based healthcare. We completed the acquisition of the Laya Healthcare facility, Cork, in the year for consideration of €22 million/£18 million delivering an earnings yield of 7.1%, let to Ireland's second largest provider of private health insurance and clinical services, providing a bespoke urgent care and diagnostic facility utilising the latest medical technology available. We have also completed the development of a primary care centre in Ballybay and are on site with three further new build projects, at Birr, Castlebar and Youghal. \n We continue to monitor several potential opportunities in Ireland and in particular two forward funded developments with an expected cost of approximately €60 million (£52 million) being progressed by our development partner in Ireland. \n Private hospitals \n The enlarged Group now has a portfolio of 33 private hospitals, including one forward funded development on site, with a total value of approximately £0.7 billion. \n In the period since acquisition, PHP has benefitted from the strong income growth from the private hospitals and we have since identified opportunities to capture upside from asset management and development. \n During the year, the portfolio has continued to demonstrate strong operating metrics, reflecting the sustained growth of the private healthcare sector. Private hospital rents increased by 3.2% in 2025 with the weighted average rent cover also improving to 2.8x (2024: 2.6x). \n With the sustained growth of the private sector market, across the three main payor groups of private medical insurance, NHS referred and self-pay, we see this asset class as an attractive investment opportunity offering robust cash flows, typically with annual indexed-linked rent reviews and strong growth prospects. \n We are currently on site with a £21 million forward funded development in Peterborough and a £6 million extension to Tees Valley Hospital, both for Ramsey Healthcare, strengthening our long-standing relationship with one of the UK's largest independent providers of NHS referred services. \n As previously announced and reported above, we expect the portfolio will be moved into a new strategic joint venture during 2026, retaining a meaningful economic exposure whilst benefiting from bringing in a strategic long-term partner to reduce leverage and diversify our funding sources. \n Joint ventures \n The Group has a strategic joint venture with USS which, as at 31 December 2025, held assets valued at £176 million (PHP share: £35 million), including two developments on site at Weston-super-Mare and Tetbury currently under construction. \n The joint venture offers the Group a long-term strategic partner with which to jointly fund essential community based NHS infrastructure, including new build primary care schemes generating positive social impact across the UK which offer important rental evidence for the wider portfolio. \n PHP has agreed commercial terms, subject to due diligence, to transfer a further £103 million of assets into the joint venture, generating a net cash receipt of £82 million net of PHP's 20% share, which is due to complete in the second quarter of 2026. If completed, this will increase the total size of the joint venture to approximately £290 million, including the two development schemes under construction. \n The Group also holds interests in two smaller joint ventures, acquired with Assura, with a value of £27 million (PHP share £14 million). \n Risk-controlled development \n During the year, the Group completed two net zero carbon developments at Croft, West Sussex and South Kilburn, London. The Group also completed a net zero carbon development of an NHS children's therapy centre at Fareham, Hampshire, a GP medical centre development in Winchester, Hampshire and a primary care centre in Ballybay, Ireland. \n The enlarged Group has an improved development capability at a time when the sector needs new healthcare infrastructure and is currently on site with six developments which are summarised in the table below: \n \n \n \n \n \n \n \n Estimated practical completion \n \n \n Total cost \n \n \n Cost to complete \n \n \n Yield on cost \n \n \n \n \n Birr PCC, Ireland \n \n \n Q2 2026 \n \n \n £13m (€15m) \n \n \n £3m (€3m) \n \n \n 5.1% \n \n \n \n \n Castlebar PCC, Ireland \n \n \n Q4 2026 \n \n \n £14m (€16m) \n \n \n £6m (€7m) \n \n \n 5.3% \n \n \n \n \n Youghal PCC, Ireland \n \n \n Q1 2027 \n \n \n £14m (€16m) \n \n \n £11m (€12m) \n \n \n 4.6% \n \n \n \n \n Private hospital, Peterborough \n \n \n Q1 2027 \n \n \n £21m \n \n \n £17m \n \n \n 6.1% \n \n \n \n \n Tetbury PCC \n \n \n Q4 2026 \n \n \n £1m 1 \n \n \n £1m 1 \n \n \n 5.5% \n \n \n \n \n Weston-super-Mare PCC \n \n \n Q3 2027 \n \n \n £2m 1 \n \n \n £2m 1 \n \n \n 5.1% \n \n \n \n \n \n \n \n \n \n \n £65m \n \n \n £40m \n \n \n 5.4% \n \n \n \n \n 1 JV assets included at 20% share. \n Investment and pipeline \n We continue to monitor several potential development opportunities with a pipeline across primary care in both the UK and Ireland and private hospitals, as detailed in the table below. These will only be progressed if accretive to earnings and they deliver the appropriate risk-adjusted returns. \n The immediate pipeline of opportunities in legal due diligence continues to be focused predominantly on PHP's existing portfolio through asset management projects, but we see a growing opportunity for development with the opportunity to fund some of these through our joint ventures to ensure appropriate risk-adjusted returns are achieved. \n \n \n \n \n Pipeline \n \n \n In legal due diligence \n \n \n Advanced pipeline \n \n \n \n \n \n \n \n Number \n \n \n Total cost \n \n \n Number \n \n \n Total cost \n \n \n \n \n Primary Care - asset management \n \n \n 15 \n \n \n £9m \n \n \n 36 \n \n \n £16m \n \n \n \n \n UK Primary Care - development \n \n \n - \n \n \n - \n \n \n 1 \n \n \n £4m \n \n \n \n \n UK Primary Care - joint venture at share \n \n \n - \n \n \n - \n \n \n 3 \n \n \n £6m \n \n \n \n \n Ireland - forward funded development \n \n \n - \n \n \n - \n \n \n 2 \n \n \n £52m (€60m) \n \n \n \n \n Total pipeline \n \n \n 15 \n \n \n £9m \n \n \n 42 \n \n \n £78m \n \n \n \n \n \n \n \n \n \n \n \n \n Conclusion \n This has been a transformational year for PHP and the strong platform we have created is well placed to deliver value as the leading investor, manager and developer of critical healthcare infrastructure across the UK and Ireland. The management are very focused on delivering on our priorities and excited about the prospects to create growth in the future. \n   \n Mark Davies CEO 16 March 2026 \n \n Financial review \n The combination with Assura has transformed the portfolio more than doubling in size to £6.0 billion (31 December 2024: £2.8 billion) and increasing our contracted rent roll to £342 million (31 December 2024: £154 million). The merger also brings significant additional benefits of increased scale, share liquidity, investor reach and a lower cost of capital that will continue to support our progressive dividend policy. \n Earnings in the year benefited from the combination with Assura in August 2025 which contributed approximately 4.5 months of income to the enlarged Group. Adjusted earnings increased by 41% to £131 million (2024: £93 million) or by 4.3% to 7.3 pence (2024: 7.0 pence) on a per share basis. Driving this increase was a 49% increase in net rental income supported by organic rental growth achieved from the portfolio and a strong culture of cost control. The full benefits of the merger will be seen in 2026 and beyond. \n The Group's balance sheet remains robust, with significant liquidity headroom, with cash and collateralised undrawn loan facilities, after capital commitments, totalling £571 million (31 December 2024: £271 million). The loan to value ratio of just under 57% (31 December 2024: 48.1%) is currently above our targeted range of between 40% and 50%, as a result of the combination with Assura, but we have a clear plan to bring this back within the targeted range during 2026. \n Assura acquisition \n On 12 August 2025, PHP obtained control of Assura with 63% of shareholders accepting our shares and cash offer which subsequently increased to 98% before the offer was closed on 10 September 2025. The acquisition of Assura was completed in full on 20 October 2025 when the final 2% of Assura shares were legally acquired and Phase 1 clearance from the CMA was received on 29 October 2025 which enabled integration of the two businesses to commence. \n The acquisition of Assura has been accounted for as a property acquisition and the fair value of the consideration paid and net assets acquired was just under £1.6 billion, funded through a combination of shares and cash and summarised in the table below: \n \n \n \n \n Fair value of consideration paid \n \n \n £ million \n \n \n \n \n 1,258.6 million shares issued \n \n \n 1,171 \n \n \n \n \n Cash \n \n \n 407 \n \n \n \n \n Total consideration paid including costs \n \n \n 1,578 \n \n \n \n \n Fair value of net assets acquired \n \n \n £ million \n \n \n \n \n Investment property \n \n \n 3,021 \n \n \n \n \n Investment in joint ventures and investments \n \n \n 57 \n \n \n \n \n Net debt \n \n \n (1,382) \n \n \n \n \n Other net assets and liabilities \n \n \n (118) \n \n \n \n \n Total net assets \n \n \n 1,578 \n \n \n \n \n \n \n \n \n \n Summarised results \n The financial results for the Group are summarised as follows: \n \n \n \n \n   \n \n \n Year ended \n 31 December 2025 \n \n \n Year ended \n 31 December 2024 \n \n \n \n \n   \n \n \n £ million \n \n \n £ million \n \n \n \n \n Net rental income \n \n \n 230 \n \n \n 154 \n \n \n \n \n Share of joint venture profit and Axis PHP contribution \n \n \n 1 \n \n \n 1 \n \n \n \n \n Administrative expenses \n \n \n (19) \n \n \n (12) \n \n \n \n \n Operating profit before revaluation and net financing costs \n \n \n 212 \n \n \n 143 \n \n \n \n \n Net financing costs \n \n \n (81) \n \n \n (50) \n \n \n \n \n Adjusted earnings \n \n \n 131 \n \n \n 93 \n \n \n \n \n Recurring revaluation gain/(deficit) on property portfolio \n \n \n 48 \n \n \n (38) \n \n \n \n \n Exceptional revaluation loss arising on acquisition of Assura 1 \n \n \n (37) \n \n \n - \n \n \n \n \n Total revaluation gain/(deficit) on property portfolio (inc. share of JVs) \n \n \n 11 \n \n \n (38) \n \n \n \n \n Fair value loss on interest rate derivatives and convertible bond \n \n \n (9) \n \n \n (8) \n \n \n \n \n Amortisation of debt MtM at acquisition (Assura and MedicX) \n \n \n (6) \n \n \n 3 \n \n \n \n \n Other exceptional items / amortisation of intangible assets \n \n \n (5) \n \n \n (3) \n \n \n \n \n IFRS profit before tax \n \n \n 122 \n \n \n 47 \n \n \n \n \n Taxation (corporation and deferred tax provision) \n \n \n (3) \n \n \n (6) \n \n \n \n \n IFRS profit after tax \n \n \n 119 \n \n \n 41 \n \n \n \n \n \n \n \n \n \n \n \n \n 1. The exceptional revaluation loss arising on the acquisition of Assura comprises transaction costs of £42 million less a £5 million discount arising on the difference between the total consideration paid and the fair value of the nets assets acquired. \n The increase in adjusted earnings in the year can be summarised as follows: \n \n \n \n \n \n \n \n Year ended \n 31 December 202 5 \n \n \n Year ended \n 31 December 2024 \n \n \n \n \n \n \n \n £ million \n \n \n £ million \n \n \n \n \n Year ended 31 December \n \n \n 93 \n \n \n 91 \n \n \n \n \n Net rental income \n \n \n 74 \n \n \n - \n \n \n \n \n Administrative expenses \n \n \n (5) \n \n \n - \n \n \n \n \n Net interest payable \n \n \n (30) \n \n \n - \n \n \n \n \n Total contribution from Assura \n \n \n 39 \n \n \n - \n \n \n \n \n PHP like-for-like net rental income growth \n \n \n 3 \n \n \n 4 \n \n \n \n \n Administrative expenses \n \n \n (2) \n \n \n (1) \n \n \n \n \n Net financing costs \n \n \n ( 2 ) \n \n \n (1) \n \n \n \n \n Year ended 31 December \n \n \n 131 \n \n \n 93 \n \n \n \n \n The largest impact on adjusted earnings came from the acquisition of Assura, which contributed £39 million reflecting approximately 4.5 months of additional income from 12 August 2025 when PHP obtained control. \n Excluding this contribution, net rental income received in 2025 increased by £3 million, reflecting the rental growth arising from rent reviews and asset management projects across the PHP portfolio, and from the addition of Laya Healthcare facility, Cork and completed developments at South Kilburn, London and Croft, West Sussex, offset by an increase in non-recoverable property costs. \n Administration expenses continue to be tightly controlled and the Group's EPRA cost ratio remains one of the lowest in the sector at 9.8% (2024: 10.1%) excluding Axis PHP and direct vacancy costs. The increase in the year reflects the temporary increase in overheads whilst the targeted £9 million of synergies are delivered. By December 2025, over £5 million or 60% of synergies had been agreed (which has increased to £7.5 million or 83% at the date of reporting on 16 March 2026) but the full year impact of these savings will be seen in 2026. \n \n \n \n \n \n \n \n Year ended \n 31 December 2025 \n \n \n Year ended \n 31 December 2024 \n \n \n \n \n EPRA cost ratio \n \n \n 11.3% \n \n \n 10.8% \n \n \n \n \n EPRA cost ratio excluding Axis and direct vacancy costs \n \n \n 9.8% \n \n \n 10.1% \n \n \n \n \n Total expense ratio 1 \n (administrative expenses as a percentage of gross asset value) \n \n \n 0.5% \n \n \n 0.4% \n \n \n \n \n \n \n \n \n \n \n 1.    Total expense ratio adjusted to reflect a pro-forma full year of administration costs for Assura \n Excluding the impact of acquisition facilities, net finance costs in the period increased by £2 million, reflecting the increase in net debt since December 2024, as a result of the acquisition of the Laya Healthcare facility, expenditure on developments and asset management projects, as well as the effect of new swap arrangements entered into January 2025. \n IFRS profit after tax increased by £78 million to £119 million (2024: £41 million) predominantly driven by the contribution from the combination with Assura of £39 million and a £86 million movement in the valuation of property portfolio with a gain of £48 million in 2025 compared to a deficit of £38 million in 2024. \n Balance sheet \n A summary of the enlarged Group's balance sheet along with a reconciliation between Adjusted, EPRA and IFRS net tangible assets (\"NTA\") is detailed in the table below: \n \n \n \n \n Year ended 31 December \n \n \n 2025 \n \n \n 2025 \n \n \n 2025 \n \n \n 2024 \n \n \n \n \n Net tangible assets \n \n \n Wholly owned \n £ million \n \n \n Share of JVs & investments \n £ million \n \n \n EPRA proportionally consolidated \n £ million \n \n \n Wholly owned \n £ million \n \n \n \n \n Investment properties \n \n \n 5,891 \n \n \n 49 \n \n \n 5,940 \n \n \n 2,750 \n \n \n \n \n Properties held for sale \n \n \n 11 \n \n \n - \n \n \n 11 \n \n \n 3 \n \n \n \n \n Group investment property \n \n \n 5,902 \n \n \n 49 \n \n \n 5,951 \n \n \n 2,753 \n \n \n \n \n Net debt \n \n \n (3,392) \n \n \n - \n \n \n (3,392) \n \n \n (1,323) \n \n \n \n \n Other net liabilities \n \n \n (116) \n \n \n 9 \n \n \n (107) \n \n \n (29) \n \n \n \n \n Fair value of bank debt \n \n \n 102 \n \n \n - \n \n \n 102 \n \n \n (25) \n \n \n \n \n IFRS NTA 1 \n \n \n 2,496 \n \n \n 58 \n \n \n 2,554 \n \n \n 1,376 \n \n \n \n \n Deferred tax and intangible assets \n \n \n 8 \n \n \n - \n \n \n 8 \n \n \n 2 \n \n \n \n \n EPRA NTA 1 \n \n \n 2,504 \n \n \n 58 \n \n \n 2,562 \n \n \n 1,378 \n \n \n \n \n Fair value of bank debt not recognised under IFRS \n \n \n 129 \n \n \n - \n \n \n 129 \n \n \n 150 \n \n \n \n \n Adjusted NTA 1 \n \n \n 2,633 \n \n \n 58 \n \n \n 2,691 \n \n \n 1,528 \n \n \n \n \n IFRS N TA per s hare (pence) \n \n \n   \n \n \n   \n \n \n 98p \n \n \n 103p \n \n \n \n \n EPRA NTA per share (pence) \n \n \n   \n \n \n   \n \n \n 99p \n \n \n 103p \n \n \n \n \n Adjusted NTA per share (pence) \n \n \n   \n \n \n   \n \n \n 104p \n \n \n 114p \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1 See note 7, net asset value per share, to the financial statements. Adjusted net tangible assets (\"NTA\"), EPRA NTA, EPRA net disposal value (\"NDV\") and EPRA net reinstatement value (\"NRV\") are considered to be alternative performance measures. \n Shareholder value \n EPRA NTA reduced by 4% to 99 pence per share (31 December 2024: 103 pence). The combination with Assura impacted the EPRA NTA by 6 pence per share, reflecting the effects of the share exchange ratio and transaction costs incurred. On an underlying basis, a 2 pence per share uplift was delivered from the positive portfolio revaluation. Including the MtM benefit of fixed rate debt of 5 pence per share, Adjusted NTA stands at 104 pence. \n The table below sets out the movements in the EPRA NTA and Adjusted NTA over the year: \n \n \n \n \n   \n \n \n £ million \n \n \n pence per share \n \n \n \n \n Opening EPRA NTA \n \n \n 1,378 \n \n \n 103 \n \n \n \n \n Adjusted earnings for the year \n \n \n 131 \n \n \n 7.3 \n \n \n \n \n Dividends paid \n \n \n (117) \n \n \n (7.1) \n \n \n \n \n Revaluation of property portfolio \n \n \n 48 \n \n \n 2 \n \n \n \n \n Impact of Assura combination \n \n \n 1,122 \n \n \n (6) \n \n \n \n \n Closing EPRA NTA per share \n \n \n 2,562 \n \n \n 99 \n \n \n \n \n Fair value of bank debt not recognised under IFRS \n \n \n 129 \n \n \n 5 \n \n \n \n \n Closing Adjusted NTA \n \n \n 2,691 \n \n \n 104 \n \n \n \n \n \n \n \n \n \n \n The mark-to-market (\"MtM\") of the Group's fixed rate debt as at 31 December 2025 was an asset of £231 million (31 December 2024: asset £126 million), equivalent to 9 pence per share (31 December 2024: asset of 9 pence), illustrating the attractive, long term fixed nature of the Group's debt book. Of this, 4 pence per share relates to the Assura debt acquired, with the 5 pence balance relating to existing PHP facilities and is not reflected in EPRA NTA. The MtM valuation is sensitive to movements in interest rates assumed in forward yield curves. \n Financing \n During 2025, we received strong support for the combination with Assura from the debt and credit markets highlighted by the record amount of financing activity in the year including: \n ·    The cash component of the transaction was funded by way of a new £1.2 billion unsecured bridging loan provided by Citibank, N.A., London Branch, Lloyds Bank plc and The Royal Bank of Scotland Plc. We have subsequently cancelled £225 million of this facility due to the refinancing work noted below with £1.0 billion of the facility now remaining. \n ·   Change of control waivers obtained plus term extensions to the unsecured Assura £266 million term-loan and £200 million revolving credit facility \n ·   £357 million of Assura private placement debt has been refinanced since completion of the acquisition, through a combination of a new unsecured Euro denominated private placement debt and re-couponing of an existing unsecured loan note, as follows: \n o     A new €120 million (£105 million) private placement loan, maturing in November 2032, has been issued at an all-in fixed rate of 3.89% providing a natural currency hedge for the Assura Irish property portfolio and the Laya Healthcare Facility, Cork acquired for €22 million in February 2025; \n o      £60 million tranche maturing October 2034 has been refinanced and re-couponed at an all-in rate of 5.60% and \n o     The balance of the private placement debt, including £70 million that matured in October 2025, has been repaid from the bridging facility put in place to finance the acquisition of Assura. \n In August 2025, Fitch confirmed Assura's credit rating as BBB+ (negative outlook) from A- following completion of the merger, reflecting the execution risk of the planned asset disposals. It is our intention to seek a credit rating for the enlarged Group in the coming months which we believe will be beneficial to the cost of finance and will widen the range of funding sources available. \n The Group's balance sheet and financing position remain strong, with cash and committed undrawn facilities totalling £571 million (31 December 2024: £271 million) after contracted capital commitments of £56 million (31 December 2024: £36 million) across the development and asset management projects currently on site. \n At 31 December 2025, total available loan facilities were £4,019 million (31 December 2024: £1,630 million), of which £3,411 million (31 December 2024: £1,327 million) had been drawn. Cash balances of £20 million (31 December 2024: £4 million) resulted in Group net debt of £3,392 million (31 December 2024: £1,323 million). \n The Group's key debt metrics are summarised in the table below: \n \n \n \n \n Debt metrics \n \n \n   \n \n \n 31 December 2025 \n \n \n 31 December 2024 \n \n \n \n \n Average cost of debt - drawn \n \n \n   \n \n \n 3.7% \n \n \n 3.4% \n \n \n \n \n Average cost of debt - fully drawn \n \n \n   \n \n \n 4.0% \n \n \n 4.0% \n \n \n \n \n Loan to value \n \n \n   \n \n \n 57% \n \n \n 48% \n \n \n \n \n Total net debt fixed or hedged \n \n \n   \n \n \n 73% \n \n \n 100% \n \n \n \n \n Net rental income to net interest cover \n \n \n   \n \n \n 2.8 times \n \n \n 3.1 times \n \n \n \n \n Net debt/EBITDA 2 \n \n \n   \n \n \n 10.4 times \n \n \n 9.3 times \n \n \n \n \n Weighted average debt maturity - drawn facilities \n \n \n   \n \n \n 4.1 years \n \n \n 5.7 years \n \n \n \n \n Weighted average debt maturity - all facilities \n \n \n   \n \n \n 3.7 years \n \n \n 4.9 years \n \n \n \n \n Total drawn secured debt \n \n \n   \n \n \n £1,082m \n \n \n £1,177m \n \n \n \n \n Total drawn unsecured debt \n \n \n   \n \n \n £2,330m \n \n \n £150m \n \n \n \n \n Total undrawn facilities and available to the Group 1 \n \n \n   \n \n \n £571m \n \n \n £271m \n \n \n \n \n Unfettered assets \n \n \n   \n \n \n £3,197m \n \n \n £47m \n \n \n \n \n \n \n \n \n \n \n \n \n 1    Including the impact of capital commitments at the year end. \n 2.    Net debt/EBITDA adjusted to reflect a pro-forma full year of earnings from Assura \n Average cost of debt \n The Group's average cost of debt increased at the year end to 3.7% (31 December 2024: 3.4%) as a result of the facilities taken on to acquire Assura. As explained above, the Group intends to reduce leverage back to the targeted range of 40-50% in 2026 through the establishment of new strategic joint ventures and delivery of further disposals. Following this, the Group expects to repay and refinance these acquisition facilities and enter into new hedging arrangements to increase the proportion of the Group's debt that is fixed or hedged to protect earnings from future interest rate volatility. \n Interest rate exposure \n The analysis of the Group's exposure to interest rate risk in its debt portfolio as at 31 December 2025 is as follows: \n \n \n \n \n \n \n \n Facilities \n \n \n          Net debt drawn \n \n \n \n \n \n \n \n £ m illion \n \n \n % \n \n \n £ m illion \n \n \n % \n \n \n \n \n Fixed rate debt \n \n \n 2,028 \n \n \n 51 \n \n \n 2,028 \n \n \n 60 \n \n \n \n \n Hedged by fixed rate interest rate swaps \n \n \n 466 \n \n \n 12 \n \n \n 466 \n \n \n 14 \n \n \n \n \n Floating rate debt - unhedged \n \n \n 1,525 \n \n \n 37 \n \n \n 898 \n \n \n 26 \n \n \n \n \n Total \n \n \n 4,019 \n \n \n 100 \n \n \n 3,39 2 \n \n \n 100 \n \n \n \n \n Interest rate swap contracts \n In January 2025, the Group fixed, for two years, £200 million of nominal debt at a rate of 3.0% and a new FX forward trade hedge, detailed below, for an all-in premium of £4.9 million. The Group also inherited from Assura a fixed rate interest rate swap in respect of the £266 million term loan, fixed at a rate of 4.148% until August 2026. The fixed rate swaps provide further protection to the Group's interest rate exposure, especially whilst rates continue to remain elevated and volatile. The fixed rate swaps in place effectively hedge out the current net debt drawn, with the exception of acquisition facilities which we expect to refinance during 2026, to bring the level of fixed and hedged proportion of the net debt drawn back to the target rate of greater than 90%. \n Accounting standards require PHP to mark its interest rate swaps to market at each balance sheet date. During the year there was a loss of £4 million (2024: loss of £5 million) on the fair value movement of the Group's interest rate derivatives due to the impact of the passage of time and decreases in interest rates assumed in the forward yield curves used to value the interest rate swaps. The net MtM of the swap portfolio is an asset value of £0.1 million (31 December 2024: net MtM asset £0.2 million). \n Currency exposure \n The Group owns €391 million or £341 million (31 December 2024: €309 million/£255 million) of Euro denominated assets in Ireland, as at 31 December 2025, and the value of these assets and rental income represented 6% (31 December 2024: 9%) of the Group's total portfolio. In order to hedge the risk associated with exchange rates, the Group has chosen to fund its investment in Irish assets through the use of Euro denominated debt, providing a natural asset to liability hedge, within the overall Group loan to value limits set by the Board. At 31 December 2025, the Group had €367 million (31 December 2024: €274 million) of drawn Euro denominated debt. \n Euro rental receipts are used firstly to finance Euro interest and administrative costs and any surpluses are used to fund further portfolio expansion. Given the large Euro to Sterling fluctuations seen in recent years and continued uncertainty in the interest rate market, the Group entered, in January 2025, a new FX forward trade hedge (fixed at €1.1459: £1) for a two-year period to cover the approximate Euro denominated net annual income of €10 million per annum, minimising the downside risk of the Euro remaining above €1.1459: £1. \n Alternative Performance Measures (\"APMs\") \n PHP uses adjusted earnings and adjusted net tangible assets amongst other APMs to highlight the recurring performance of the property portfolio and business, which management believes provide additional information to help understand the financial performance in the year. The APMs are in addition to the statutory measures from the financial statements. The measures are defined and reconciled to amounts presented in the financial statements within this Annual Report at Note 7 and in the Glossary. \n Richard Howell \n Chief Financial Officer \n 16 March 2026 \n \n \n   \n Risk management and principal risks \n Flexible and responsive to risks \n Our risk management processes enable us to be flexible and responsive to the impact of risks on the business. \n Risk management overview \n Effective risk management is a key element of the Board's operational processes. Risk is inherent in any business, and the Board has determined the Group's risk appetite, which is reviewed on an annual basis. Group operations have been structured in order to accept risks within the Group's overall risk appetite and to oversee the management of these risks to minimise exposure and optimise the returns generated for the accepted risk. The Group aims to operate in a low risk environment appropriate for its strategic objective of generating progressive returns for shareholders which are as follows: \n •       investment predominantly focuses on the primary healthcare real estate sector which is traditionally much less cyclical than other real estate sectors; \n •       the majority of the Group's rental income is received directly or indirectly from government bodies in the UK and Ireland; \n •       the Group benefits from long initial lease terms, largely with upwards-only review terms, providing clear visibility of income; \n •       the Group has a small (€0.4 million) exposure as a direct developer of real estate, which means that the Group is not exposed to risks that are inherent in property development; \n •       the Board funds its operations so as to maintain an appropriate mix of debt and equity; and \n •       debt funding is procured from a range of providers, maintaining a spread of maturities and a mix of terms so as to fix or hedge the majority of interest costs. \n The structure of the Group's operations includes rigorous, regular review of risks and how these are mitigated and managed across all areas of the Group's activities. The Group faces a variety of risks that have the potential to impact on its performance, position and longer term viability. These include external factors that may arise from the markets in which the Group operates, government and fiscal policy, general economic conditions and internal risks that arise from how the Group is managed and chooses to structure its operations. \n Approach to risk management \n Risk is considered at every level of the Group's operations and is reflected in the controls and processes that have been put in place across the Group. The Group's risk management process is underpinned by strong working relationships between the Board and the management team which enables the prompt assessment and response to risk issues that may be identified at any level of the Group's business. \n The Board is responsible for effective risk management across the Group and retains ownership of the significant risks that are faced by the Group. This includes ultimate responsibility for determining and reviewing the nature and extent of the principal risks faced by the Group and assessing the Group's risk management processes and controls. These systems and controls are designed to identify, manage and mitigate risks that the Group faces but will not eliminate such risks and can provide reasonable but not absolute assurance. \n The management team assists the Board in its assessment and monitoring of operational and financial risks and PHP has in place robust systems and procedures to ensure risk management is embedded in its approach to managing the Group's portfolio and operations. PHP has established a Risk Committee that comprises the Chair of the Audit Committee and members of its senior management team and is chaired by the Chief Financial Officer, who is experienced in the operation and oversight of risk management processes, along with independent standing invitees attending throughout the year. \n The Board has delegated to the Audit Committee the process of reviewing the Group's systems of risk management and their effectiveness. These systems and processes have been in place for the year under review and remained in place up to the date of approval of the Annual Report and Accounts. \n PHP has implemented a wide-ranging system of internal controls and operational procedures that are designed to manage risk as effectively as possible, but it is recognised that risk cannot be totally eliminated. Staff employed by PHP are intrinsically involved in the identification and management of risk. Strategic risks are recorded in a risk register and are assessed and rated within a defined scoring system. \n The Risk Committee reports its processes of risk management and rating of identified and emerging risks to the Audit Committee. The risk register is reviewed and updated every six months by the Director of Finance assisted by members of the Risk Committee, and assesses inherent and emerging risks the business faces, as well as the residual risk after specific safeguards, mitigation and/or management actions have been overlaid. \n The risk register forms an appendix to the report which details risks that have: (i) an initial high inherent risk rating; and (ii) higher residual risk ratings. The Board retains ultimate responsibility for determining and reviewing the effectiveness of risk management but has delegated the process to the Audit Committee which is assisted by the Risk Committee. The Audit Committee agrees which risks are to be prioritised by management in fulfilling its duties, which is monitored by the Risk Committee. \n The Board recognises that it has limited ability to control a number of the external risks that the Group faces, such as the macroeconomic environment and government policy, but keeps the possible impact of such risks under review and considers them as part of its decision-making process. \n Our risk management structure \n \n \n \n \n \n Structure \n \n \n \n \n Responsibility \n \n \n \n \n \n Board \n \n \n •       Sets strategic objectives and considers risk as part of this process. \n •       Determines appropriate risk appetite levels. \n \n \n \n \n Audit Committee \n \n \n Reports to the Board on the effectiveness of risk management processes and controls: \n •       External audit \n •       Risk surveys \n •       Health and safety \n •       Insurance \n •       Need for an internal audit function \n \n \n \n \n Risk Committee \n \n \n Reports to and assists the Audit Committee, monitoring and reviewing: \n •       Attitude to and appetite for risk and future risk strategy \n •       Company's systems of internal controls and risk management \n •       How risk is reported internally and externally \n •       Processes for compliance with law, regulators and ethical codes of practice \n •       Prevention of fraud \n \n \n \n \n Senior management \n \n \n Implements and monitors risk mitigation processes: \n •       Policies and procedures \n •       Risk management and compliance \n •       Key performance indicators \n •       Specialist third-party reviews \n \n \n \n \n   \n Monitoring of identified and emerging risks \n The Board continues to monitor recently identified and emerging risks and their potential impact on the Group. The manner in which we have addressed the challenges of the last few years has demonstrated the resilience of our business model, and our robust risk management approach, to protect our business through periods of uncertainty and adapt to a changing environment. \n 2025 saw four rate cuts to 3.75% as inflation pressures eased during the year but economic growth remained largely subdued. Despite inflation falling in the period it remained persistently above the Bank's 2% target rate which has limited the pace of rate reductions. Financial markets experienced intermittent volatility, driven by shifting expectations around inflation, growth, and the timing of further rate cuts as well as wider macroeconomic and political changes, while overall economic growth remained modest and business and consumer confidence cautious. Despite this, quiet optimism remains in the market that there will be several further interest rate cuts during 2026. We welcome the Labour governments commitment to the NHS and their support to shift medical care from hospitals to the community. \n The potential adverse impact of these factors on our business includes reduced demand for our assets impacting property values in the investment market, increased financing costs and our ability to continue to execute our acquisition, disposal and development strategy which could impact our rental income and earnings. The Board and key Committees have overseen the Group's response to the impact of these challenges on our business and the wider economic influences throughout the year. \n The Board has considered the principal risks and uncertainties as set out in this Annual Report, in light of the Assura merger and the challenging macroeconomic environment, and does not consider that the fundamental principal risks and uncertainties facing the Group have changed. We have set out in our principal risk tables on the following pages an update on the changes to our principal risks and expected impact on our business, along with the mitigating actions and controls we have in place. The Group's continued ability to be flexible to adjust and respond to these external risks as they evolve will be fundamental to the future performance of our business. The Group's immediate focus remains reducing the leverage to within policy. \n The Board also considered, at its annual Strategy Day, emerging risks affecting the current primary care delivery model, in particular the impact of artificial intelligence increasing cyber and security threats on our digital technologies, and accordingly this is sharply in focus as we progress our best of both approach to integration. \n Mapping our key risks and residual risk movement \n We use a risk-scoring matrix to ensure we take a consistent approach when assessing the overall impact of risks. The acquisition of Assura, which is a very similar business, has not altered the type of risks faced by the Group, although certain risks are more elevated in the short term as a result of the merger, notably debt financing and people. The residual risk exposures of the Company's principal risks are shown in the heat map below, being the risk after mitigating actions have been taken to reduce the initial inherent risks. \n Grow property portfolio \n 1.     Property pricing and competition \n 2.     Financing \n Manage effectively and efficiently \n 3.     Lease expiry management \n 4.     People \n 5.     Responsible business \n Diversified, long term funding \n 6.     Debt financing \n 7.     Interest rates \n Deliver progressive returns \n 8.     Potential over-reliance on the NHS and HSE \n 9.     Foreign exchange risk \n ®     Indicates risk movement from last year \n Principal risks and uncertainties \n The Board has undertaken a robust assessment of the emerging and principal risks faced by the Group that may threaten its business model, future performance, solvency or liquidity and its ability to meet the overall objective of the Group of delivering progressive returns to shareholders through a combination of earnings growth and capital appreciation. As a result of this assessment there have been no changes to the number of principal risks faced by the business in the year, which are all still deemed appropriate. These are set out below, presented within the strategic objective that they impact: \n Residual risk movement in the year \n á Increased ßà Unchanged â Decreased Low 0-5 Medium 6-14 High 15-20 \n   \n \n \n \n \n Grow property portfolio \n \n \n \n \n \n \n \n \n \n \n 1. Property pricing and competition \n ßà A C D KPIs impacted \n The primary care property market continues to be attractive to investors attracted by the secure, government backed income, low void rates and long lease. \n The emergence of new purchasers in the sector and the recent slowing in the level of approvals of new centres in the UK may restrict the ability of the Group to secure new investments. \n \n \n Commentary on risk in the year \n In terms of values, the Group has previously benefited from a flight to income as a consequence of the wider economic uncertainty seen in previous years, with demand increasing from investors seeking its long term, secure, government backed cash flows against a backdrop of limited supply. We have seen an inflexion point in the market with deficits in recent years now returning some positive revaluation gains during 2025, driven by rental growth and yields remaining consistent. The primary focus by the enlarged Group on core government backed income positions us well for future valuations. \n Elevated interest rates, including volatility, in particular, for gilts and bonds, continues to hold back property yields in the sector. \n \n \n Mitigation \n The reputation and track record of the Group in the sector mean it is able to source forward funded developments and existing standing investments from developers, investors and owner-occupiers. Our increased scale following the merger to create the largest UK's healthcare REIT has further aided our position. \n As a result, the Group has several formal pipeline agreements and long-standing development relationships that provide an increased opportunity to secure developments that come to market in the UK and Ireland. \n Despite the subdued economic and investment market conditions faced, the Group continues to have a strong, identified pipeline of investment opportunities in the UK and Ireland. \n   \n   \n \n \n \n \n Inherent risk rating \n 2 4 6 8 10 12 14 16 18 20 \n                          á \n High \n Likelihood is high and impact of occurrence could be major. \n \n \n \n \n Residual risk rating \n 2 4 6 8 10 12 14 16 18 20 \n      á \n Medium \n The Group's position within the sector and commitment to and understanding of the asset class mean PHP is aware of a high proportion of transactions in the market and potential opportunities coming to market. \n Active management of the property portfolio generates regular opportunities to increase income and lease terms and enhance value. \n \n \n \n \n 2. Financing \n ßà G H KPIs impacted \n The Group uses a mix of shareholder equity and external debt to fund its operations. A restriction on the availability of funds would limit the Group's ability to fund investment and development opportunities and implement strategy. \n Furthermore, a more general lack of equity or debt available to the sector could reduce demand for healthcare assets and therefore impact values. \n \n \n Commentary on risk in the year \n This has been a transformation year for PHP following the merger which included putting in place a two-year £1.2 billion acquisition debt facility with £0.2bn of this facility cancelled post completion. We were supported by all our existing relationship banks during the merger including several new banks, highlighting the support and appetite for lenders in our sector. We were also supported unanimously from our equity investors for the merger. \n Following the merger we refinanced several Assura debt instruments, with the £266 million Barclays facility and £200 million RCF both extended by one year with expiries to 2027, with further extensions available. We also refinanced the £60 million US PP and issued a new €120 million US PP. 2026 will be another significant year in terms of our debt strategy as we continue our transition of the enlarged business to an unsecured structure. \n The Group's undrawn facilities mean it currently has headroom of £571 million, after capital commitments. \n All covenants have been met with regard to the Group's debt facilities and these all remain available for their contracted term. \n \n \n Mitigation \n Existing and new debt providers are keen to provide funds to the sector and specifically to the Group, attracted by the strength of its cash flows. \n We have several offers from highly credible investors to establish a new joint venture of the private hospitals with funds to be used to pay down acquisition financing. \n The Board monitors its capital structure and maintains regular contact with existing and potential equity investors and debt funders. Management also closely monitors debt markets to formulate its most appropriate funding structure. \n \n \n \n \n Inherent risk rating \n 2 4 6 8 10 12 14 16 18 20 \n                          á \n High \n Likelihood is high and impact of occurrence could be major. \n \n \n \n \n Residual risk rating \n 2 4 6 8 10 12 14 16 18 20 \n         á \n Medium \n The Group takes positive action to ensure continued availability of resource, maintains a prudent ratio of debt and equity funding and refinances debt facilities in advance of their maturity. \n \n \n \n \n Manage effectively and efficiently \n \n \n \n \n 3. Lease expiry management \n ßà E F KPIs impacted \n The bespoke nature of the Group's assets can lead to limited alternative use. Their continued use as fit-for-purpose medical centres is key to delivering the Group's strategic objectives. \n \n \n Commentary on risk in the year \n Lease terms for all property assets will erode and the importance of active management to extend the use of a building remains unchanged. \n The amount of income that is currently holding over or is expiring in the next three years has increased slightly to 17% in the year. Shorter leases and holding over assets mute rental growth whilst being a negative drag on valuations. \n \n \n Mitigation \n The asset and property management teams meet with occupiers on a regular basis to discuss the specific property and the tenants' aspirations and needs for its future occupation. \n We exchanged on eight new asset management projects, 21 lease re-gears and 20 new lettings in 2025, enhancing income and extending occupational lease terms. \n In addition, there is a strong pipeline of 51 projects that will be progressed in 2026 and the coming years. \n Despite the income holding over or expiring in the next three years increasing, all these leases are expected to renew; 75% of these have agreed terms or are in advanced discussions to renew the lease. \n The increase is driven by a delay in NHS approval as ICBs finalise their future estate strategies together with the requirement for new rents to be approved by the District Valuer. We continue to maintain a close relationship with all parties concerned and receive NHS rent reimbursement in a timely manner. \n \n \n \n \n Inherent risk rating \n 2 4 6 8 10 12 14 16 18 20 \n                   á \n Medium \n Likelihood of limited alternative use value is moderate but the impact of such values could be serious. \n \n \n \n \n Residual risk rating \n 2 4 6 8 10 12 14 16 18 20 \n         á \n Medium \n Management employs an active asset and property management programme and has a successful track record of securing enhancement projects and securing new long term leases. \n \n \n \n \n 4. People \n ßà F KPI impacted \n The inability to attract, retain and develop our people to ensure we have the appropriate skill base in place in order for us to implement our strategy. \n \n \n Commentary on risk in the year \n Following the merger and coming together of two complementary management teams, finding the right mix and balance of the teams is critical. We have adopted a best of both approach within the enlarged Group, with key personnel being retained. The merger will create many opportunities for the combined teams and this is a key focus of the Board to ensure PHP continues to meet its strategic objectives. \n There is a risk associated with any merger that key staff will leave and it is of paramount importance that this is navigated with appropriate benchmarking of the enlarged business against similar sized REITs. \n PHP established an Integration Working Group has been established across teams to ensure business as usual activities continue and we work towards full integration of systems and processes. \n \n \n Mitigation \n Succession planning is in place for all key positions and will be reviewed regularly by the Nomination Committee. \n We welcomed the Chief People Officer from Assura into the enlarged Group who has huge experience dealing with the many obstacles that comes with integrating two teams. \n Remuneration incentives are in place, such as bonuses and an LTIP for Executive Directors and senior management to incentivise and motivate the team, which are renewed annually and benchmarked to the market. \n Notice periods are in place for key employees. \n \n \n \n \n Inherent risk rating \n 2 4 6 8 10 12 14 16 18 20 \n                   á \n Medium \n Likelihood and potential impact could be medium. \n \n \n \n \n Residual risk rating \n 2 4 6 8 10 12 14 16 18 20 \n                  á \n Medium \n The Remuneration Committee has benchmarked remuneration with the help of remuneration consultants, and reviewed and updated policies to ensure retention and motivation of the management team. \n \n \n \n \n 5. Responsible business \n ßà D E H KPIs impacted \n Risk of non-compliance with responsible business practices, including climate mitigation and ethical business consideration, not meeting stakeholders' expectations, leading to possible reduced access to debt and capital markets, weakened stakeholder relationships and reputational damage. \n \n \n Commentary on risk in the year \n Risk that properties no longer meet occupiers' expected environmental requirements. \n Stakeholders including investors and debt providers see ESG as a key issue and want to see a sufficiently developed plan to decarbonise the property portfolio and to operate to the highest standards of business ethics and due diligence. \n There is a risk that we may not meet the hurdles sought by stakeholders including equity and debt investors should PHP not focus enough on ESG matters, potentially impacting the funding of the business significantly. \n Additionally, political and regulatory changes to corporate governance and disclosure, energy efficiency and net zero carbon requirements are expected to be mandated in the short to medium term. The recent introduction of the Corporate Sustainability Reporting Directive (\"CSRD\") and International Sustainability Standards Board (\"ISSB\"), amongst other policies, is a key example of increasing requirements, although not all are applicable to PHP at present. \n Following the Assura merger the Board reevaluated the Board's inclusion in the ESG Committee and determined that authority should be delegated to the Executive Committee who then report directly to the Board. \n \n \n Mitigation \n PHP's ESG credentials remain at the forefront of its strategic planning and continue to drive the Group's ESG agenda forward. During the year PHP has: \n •       worked with Achilles to provide limited third-party assurance of our disclosures and achieved certification to Toitu Carbon Reduce and ISO 14064; \n •       provided staff training covering individual personal development and ESG; \...

View stock analysis, news, and events for Primary Health Properties Plc