Harry Hyman’s Primary Health Properties is buying rival healthcare investor Prime Public Partnerships in a £41.4m all-paper deal.
The investor in primary healthcare facilities will add PPP’s 54-properties valued at £233m to its portfolio, boosting it to £880m.
The deal, which is subject to PHP shareholder approval, is for an estimated consideration of £41.1m, which will be paid in new shares issued at a price of 320p to PPP’s owners.
This will include 12.5m initial consideration shares at completion of the deal and up to 513,000 additional shares based on the actual value of PPP at completion.
Some 235,000 further consideration shares may be issued subject to the amendment of a PPP portfolio property lease within 12 months of completion.
If all the further consideration shares are issued this would be on the basis that the final consideration is equal to approximately £42.6m.
As part of the deal PHP assumes £178.4m of borrowings against the PPP properties which will be financed.
PHP adds rent of £14.3m pa to its income and unexpired leases of an average of 17 years.
Hyman’s company also said it has an agreement with Prime giving it the right of first refusal on Prime’s future medical centre developments for five years.
It also said that it expects the deal to be earnings enhancing in the first full year following acquisition, with the opportunity to increase this further through asset management and debt refinancing opportunities.
PHP managing director Hyman said: “The proposed acquisition of the PPP property portfolio represents a significant development for PHP. Portfolios of this scale and quality are rarely available and the board are delighted that PHP has been able to secure the agreement. Following completion of the acquisition our strategic position as the market leader in UK primary care assets will be enhanced and, critically, the group’s progression to full dividend cover is likely to be significantly accelerated as a result of the PPP rental income and the potential refinancing opportunity of the PPP borrowings.”
Richard Laing, chief executive of Prime, said: “We are delighted to support the ongoing expansion and success of PHP and expect this to be the start of a valuable partnership between the two leading players in the sector. Prime’s continued role as an expert primary care developer can play an important role in the future success in PHP and we are looking forward to working closely with its management team to maximise the opportunities available to both parties.”
