Refinance of debt facility and disposal of asset

RNS Number : 9541A

Primary Health Properties PLC

27 March 2013

Primary Health Properties PLC

Primary Health Properties PLC ("PHP"), one of the largest providers of modern primary healthcare facilities, today announces the completion of the refinancing of a significant debt facility on more favourable terms and the disposal of an asset which it held on a finance lease.

Refinancing

In December 2012, PHP announced its acquisition of Apollo Medical Partners Limited ("Apollo"). This comprised a portfolio of 14 assets valued at £62.3 million, representing a cash yield to PHP of 5.9% after all costs. The acquisition also saw PHP assume amortising debt Apollo had been provided by Aviva totalling £49.8 million that had a fixed interest rate averaging some 5.61%.

PHP has successfully completed the refinancing of this Aviva facility with a new £50 million, four year, interest only, revolving loan facility provided by Barclays Bank plc. With the Barclays facility secured at an attractive margin and the underlying interest rate swapped for the duration of the loan at current rates, this transaction locks in a surplus for PHP between its cash yield on the property acquired and associated cost of debt and management fees in excess of 220 basis points.

Total early repayment fees of £4.9 million were incurred, as compared to a provision of £4.2 million that was made in the 2012 full year accounts. The movement was due to fall in underlying gilt yields mirrored in a reduction in swap rates. PHP had received a contribution of £2.6 million toward this cost from the vendor upon the acquisition of Apollo.

Disposal of asset

PHP has also disposed of an asset in Withernsea, Yorkshire that it held under a finance lease. The asset was sold back to the head lessor for a consideration of £3.77 million, which is £0.7 million ahead of PHPs carrying value of the net investment in the finance lease. The sale realises a sizeable profit from an asset that was held under a complicated ownership structure.

Harry Hyman, Managing Director of PHP, said:

"We are delighted to conclude the refinancing which crystallises the significant surplus of PHPs cash yield from the Apollo acquisition over its associated cost of debt. This new facility demonstrates PHP's continuing ability to source funds at attractive rates and contributes toward achieving management's primary objective of returning the Company to full dividend cover at the earliest opportunity.

The opportunistic sale of the Withernsea asset realises a satisfying surplus."

Ends

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

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