Primary Health Properties PLC (LON:PHP), a leading investor in critical healthcare infrastructure in the UK and Ireland, and Universities Superannuation Scheme (USS) has announced an increase in the target size of their existing joint venture to £400 million (from £250 million). Subject to additional approval, the investment has the potential to grow to £800 million over time. The JV has also exchanged contracts on the transfer of c.£67 million of assets into the vehicle, with a further identified pipeline of assets expected to follow.
The 20:80 JV will continue to support investment into essential NHS community healthcare buildings, aiming to address the current backlog of patients awaiting care. Reflecting the UK’s ageing population and a growing number of people living with chronic conditions, the provision of modern, flexible healthcare assets remains central to the NHS’s priority of delivering care closer to patients.
The JV focuses exclusively on assets let directly to NHS or GP tenants with rents linked to inflation or with fixed uplifts.
Mark Davies, CEO of PHP, commented:
“We are delighted to be extending our successful joint venture with USS, which will enable significant further investment into critical healthcare infrastructure in the UK.
“With a portfolio approaching £300 million, the JV will focus on funding new Neighbourhood Health Centres and other healthcare assets let to the NHS that help deliver the NHS 10-year plan. Future growth in the JV will come from further transfers of existing assets and new investment opportunities, including risk-controlled developments.
“We value the partnership that we have with USS, who are expressing their confidence in primary care by committing additional equity to the joint venture.”
Alex Turner, Head of Property at USS Investment Management, stated:
“We are happy to announce the expansion of our established joint venture with PHP”.
“As the UK’s demographics evolve, we continue to believe in the robustness of the healthcare sector, and we’re delighted to invest further into primary care.”
Transfer of assets
PHP has exchanged contracts on the disposal of nine primary care assets to the existing primary care joint venture with USS for a gross consideration of £67 million, in line with book value. PHP holds a 20% equity interest in the joint venture, and the net proceeds will be used to reduce net debt. Following the transfer, the joint venture will have assets in excess of £250 million, exceeding the original target.
The enlarged joint venture gives PHP access to an alternative source of capital alongside a highly credible long-term partner. USS has indicated its intention to grow the joint venture, sharing PHP’s belief in the long-term opportunity in primary care real estate, including the development of Neighbourhood Health Centres.
Credit rating reaffirmed and outlook improved
PHP is also pleased to note that Fitch Ratings has reaffirmed the credit rating of Assura Limited as BBB+ with a revised outlook of Stable (previously Negative), following the progress made on private hospital and primary care joint ventures.
The strength of the PHP platform is endorsed by the quality of its JV partnerships.
