Primary Health Properties PLC (LON:PHP), a leading investor in critical healthcare infrastructure in the UK and Ireland, has announced it has entered into a conditional agreement to establish a 50:50 strategic joint venture with GIC, a leading global institutional investor, to invest in private hospital infrastructure. The JV will be seeded with 27 private hospitals from PHP’s existing portfolio, valued at approximately £0.7 billion, providing a strong foundation to benefit from the long-term structural growth in the sector.
Completion is expected in November 2026 and PHP expects to receive net proceeds of approximately £0.5 billion, which will be used to repay variable rate debt facilities, including the remaining balance of the bridging facility put in place to acquire Assura plc in 2025.
Mark Davies, CEO of PHP, commented:
“The establishment of this joint venture with GIC marks an important strategic milestone for PHP. In addition to generating proceeds to reduce our borrowings, the transaction enhances returns on invested equity for our shareholders and brings a highly aligned capital partner to support investment in essential UK hospital infrastructure. Together, we are well positioned to capitalise on the significant structural growth opportunities in the private healthcare market.
“PHP is delighted to have GIC as a partner and is excited about the opportunity to grow this platform in the future.”
Overview of the transaction
The JV’s initial portfolio comprises the Seed Portfolio of 27 private hospitals from PHP’s existing portfolio, transferred at a discount of 5% to the 31 December 2025 book value. PHP will retain a 50% interest in the JV and act as its property and asset manager.
The Seed Portfolio has a gross asset value of approximately £0.7 billion, with a weighted average unexpired lease term of 22 years. It benefits from long-term, index-linked leases and strong underlying operating performance.
Primary Health Properties expects to receive immediate cash proceeds of approximately £0.5 billion from the transaction, net of retained equity interest and deferred consideration of £47.5 million.
The Company believes the principal benefits of the JV for shareholders are:
- Deleveraging: net proceeds will be used to reduce PHP’s debt following the acquisition of Assura
- Earnings diversification: PHP retains a significant interest in the hospital portfolio and gains a new, recurring management fee income stream, with potential upside from a performance fee
- Strategic partnership: combines PHP’s specialist healthcare real estate expertise with a leading global institutional investor, with the flexibility to grow over time
Completion of the JV is conditional on the finalisation of a new secured club debt facility where all key terms have been agreed with lenders and documentation is ongoing. All property and commercial due diligence has been completed.
Use of net proceeds and financial policies
Proceeds realised from the transaction will be used to repay and cancel in full the acquisition bridging facility and the £266 million term loan.
Following the transaction, PHP’s net debt will fall to approximately £2.9 billion with a weighted average interest rate of 3.6%.
On a proforma basis, PHP’s net debt to EBITDA will reduce below 10 times, LTV to below 55% and the proportion of government-backed income will return above 80%. PHP targets a strong investment grade credit rating of BBB+ or above, supported by our portfolio metrics and disciplined financial policies. The strength of the PHP platform is endorsed by the quality of its JV partnerships.
Rothschild and Co are acting as sole financial advisor to PHP on the transaction and as debt advisor to the JV on the financing process.
