PHP (LSE: PHP) has agreed to sell a 50% interest in 27 private hospitals to a new 50:50 joint venture with GIC, raising about £0.5bn to repay debt taken on for its Assura takeover. The shares were little changed in early trading today.
PHP stood at 90.85p at 09:27, down 0.16% from Friday’s close of 91.00p, within a day’s range of 90.4p to 91.8p. That is about 17% below the 52-week high of 109.6p reached on the 24th of February and just above the low of 88.3p set on the 8th of October. The shares are down 1.9% over 12 months, excluding dividends.
The venture will hold the 27 hospitals, valued at about £0.7bn, which PHP is transferring at a 5% discount to their book value at the end of December 2025. PHP keeps its 50% and will act as property and asset manager. Completion is expected in November and depends on a new secured club debt facility, with key terms agreed with lenders and documentation continuing. Due diligence is finished.
Net proceeds of about £0.5bn come after PHP’s retained stake and £47.5m of deferred consideration. They will repay and cancel the Assura bridging facility and a £266m term loan, taking net debt to about £2.9bn. The weighted average interest rate falls to 3.6%, from 3.9%, according to Shore Capital. On a pro forma basis, net debt to EBITDA, a measure of earnings against borrowings, is below 10x, loan-to-value is below 55%, and government-backed income is above 80%. PHP targets a BBB+ credit rating or better.
The leases have a weighted average unexpired term of 22 years and are index-linked.
“The establishment of this joint venture with GIC marks an important strategic milestone for PHP.”
Mark Davies, chief executive of PHP
Shore Capital analyst Andrew Saunders applauded the structure and described GIC as a Singapore sovereign wealth fund. He expects further disposals into PHP’s existing USS joint venture, where it keeps 20%, and sees net debt to EBITDA on track for its target of below 9.5x. He called the shares highly attractive, with one of the best risk-adjusted total return profiles in the sector.
Dividend income is a focus of the Shore Capital note. Saunders points to 30 years of unbroken covered dividend growth and a forecast yield of 8.2% for FY27. The fourth quarterly interim of 1.825p is payable on Friday the 20th of November, securing 7.3p for FY26.