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Company Primary Health Properties PLC
TIDM PHP
Headline

Acquisition of Apollo Medical Partners Ltd

Released 07:00 14-Dec-2012
Number 5156T07

RNS Number : 5156T
Primary Health Properties PLC
14 December 2012
 



 

News Release

14 December 2012

 

Primary Health Properties PLC

 

Acquisition of Apollo Medical Partners Ltd

Primary Health Properties PLC ("PHP"), one of the UK's largest providers of modern, purpose built primary healthcare facilities, announces that it has unconditionally agreed to acquire the entire issued share capital of Apollo Medical Partners Limited ("AMP"), an investor in primary care and pharmacy properties with a UK wide portfolio.

·    Consideration payable of approximately £10.2 million, including transaction costs of £0.6 million

·     Consideration will be settled as to

£4.2 million payable in cash on completion (including transaction costs)

£1.8 million in cash deferred until delivery of assets under construction, and

the issue on completion to the vendors of AMP of 1,231,395 new Ordinary shares of 50p each in the capital of PHP

·     The Consideration Shares will be subject to a twelve month lock-in and subsequent 12 month orderly market agreement

·     High quality portfolio of 14 primary care properties across the UK

11 are completed assets, 10 of which were constructed within the last five years

Three due for completion between February - August 2013

·     Total rent roll on completion of £3.8 million, reflecting a net initial yield on actual acquisition cost of 5.9 per cent

·     A weighted average lease length of 18 years

·     Assumption of  fixed cost debt of £49.8 million

 

Application is being made to the UK Listing Authority for admission of the Consideration Shares to the Official List and to trading on the London Stock Exchange. It is expected that admission will become effective and dealings in such shares will commence on or after 19 December.

Following admission of the Consideration Shares, the total number of ordinary shares in issue will be 76,034,208.

AMP owns 14 primary care properties, 11 of which are completed assets, all but one constructed within the last five years, and three that are on site with planned completion dates between February 2013 and August 2013.  £1.8 million of the above cash consideration is deferred and released in part against the delivery of each of the three assets still under construction.  The total rent roll once all assets are complete will be £3.8 million. 

This high quality portfolio is let to General Practitioners, Primary Care Trusts, NHS bodies and pharmacy operators with a weighted average lease length remaining of 18 years.  Rental income is derived 92% directly or indirectly from the NHS with the remainder largely from strong covenant pharmacy operators. The properties are located across mainland UK.

The assets have been acquired at a total cost of £64.6 million, including transaction costs, reflecting a net initial yield to PHP of 5.9 per cent.

The portfolio has been independently valued by Lambert Smith Hampton at an aggregate of £62.3 million, which results in a reduction of net asset value of £2.3 million or 3.0 pence per share.  There are a number of opportunities within the portfolio to add to the rent roll and secure increases in valuation.

PHP's costs of the transaction of £0.6 million are significantly below industry standard purchaser costs for property transactions of £3.6 million, reflecting the saving due to the corporate nature of the transaction. 

In addition to the consideration payable, PHP will assume AMP's £49.8 million of fixed cost debt.  The assumed debt has a weighted life of approximately 18 years and will be incremental to the Group's existing debt facilities.

PHP will look to re-set or refinance this debt at the earliest opportunity to lock in to historically low interest rates and achieve a cost of funding of c.200 bps below the transaction initial net yield. An allowance has been made for a proportion of the potential cost of re-setting the debt in agreeing the consideration.

The Apollo Capital Projects Development team ("ACPD"), a sister company of AMP and led by Johnny Dryburgh, have developed, procured and managed the portfolio.  ACPD will complete the procurement and handover into occupation of the three schemes that are under construction.

PHP have entered into a Partnership Agreement with ACPD with an option to fund and acquire future schemes in their ongoing development pipeline.

Following completion, PHP's portfolio will comprise of 183 primary care properties with a total value of £643.3 million (including commitments).  Total debt facilities available to PHP will be £508.5 million, of which £399.9 million will be drawn or committed.  The group's contracted rent roll will increase to £38.9 million.

PHP believes that the acquisition adds high quality assets to its existing portfolio and increases its recurring income surplus which will reduce the proportion of its current dividend that is partially uncovered by earnings.

 

Harry Hyman, Managing Director of PHP, said:

"This is an important acquisition for PHP which demonstrates our ability to acquire modern, well-let portfolios at cash yields ahead of the current portfolio net initial yield.  The acquisition adds 14 high quality assets to our existing portfolio, boosts PHPs rental profits and is in line with management's aim of returning to full dividend cover at the earliest opportunity."

 

Acquired Portfolio

Property

Region

m2

Clydach Medical Centre, Clydach

Wales

1,549

Tweedale Medical Practice, Fort William

Scotland

3,468

Govan Medical Centre, Govan

Scotland

510

Dr Youd & Partners, Heckmondwike Medical Centre

Yorkshire & Humberside

1,600

Dr Hoggins & Partners, Mold Medical Centre

Wales

986

Old Kilpatrick Medical Centre, Old Kilpatrick

Scotland

571

Rhyl Medical Centre, Rhyl

Wales

1,706

Rippendon Medical Centre, Rippendon

Yorkshire & Humberside

1,090

Dr Eisner & Partners, Shipley

Yorkshire & Humberside

2,394

Dr Bondi, Sudbury Medical Centre

East Anglia

1,063

Port Tennant Practice, Swansea

Wales

2,901

Carlton Medical Practice, Bradford

Yorkshire & Humberside

705

Rumney Medical Practice, Cardiff

Wales

2,210

Cloughmore Medical Practice, Cardiff

Wales

1,042

Total


21,795

 

Analysis of rental income by region

Region

Proportion

Wales

46%

Scotland

24%

Yorkshire & Humberside

27%

East Anglia

3%

 

 

More information on Primary Health Properties PLC can be found on www.phpgroup.co.uk

For further information please contact:

 

Harry Hyman

Managing Director

Primary Health Properties PLC

Tel: 020 7451 7050

Phil Holland

Deputy Managing Director

Nexus TradeCo Limited

Tel: 020 7451 7050

 

Tim Walker-Arnott

Property Director

Nexus TradeCo Limited

Tel: 01483 749033

David Rydell / Victoria Geoghegan / Elizabeth Snow

Pelham Bell Pottinger

0207 861 3821



 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Acquisition of Apollo Medical Partners Ltd - RNS