Primary Health Properties has launched a seven-year retail bond paying interest of 5.375% twice a year.
The company is one of the largest providers of modern primary healthcare facilities. It owns more than 160 properties, which it leases to GPs and NHS organisations, which in turn deliver a revenue stream to PHP.
The company is the first real estate investment trust (REIT) in the UK to issue a retail bond.
The offer period for the bond is from today until Monday 16 July. The fixed-rate bond will pay interest in January and July with the first payment due on 31 January 2013 and the last due on 23 July 2019.
The minimum investment is £2,000, and multiples of £100 can be bought thereafter.
The bond is expected to list on the London Stock Exchange's Order Book for Retail Bonds, and investors will be able to buy and sell it on that market during the life of the bond.
The authorised distributors for the bond include Barclays Stockbrokers, Killik & Co and Redmayne-Bentley.
Diversity
Harry Hyman, managing director of Primary Health Properties, comments: "PHP is seeking access to a wide variety of sources of capital to expand its portfolio whilst diversifying its funding sources. We believe that a retail bond offers a good opportunity to achieve this and enables fixed income investors, a new class of investor to the company, to benefit from PHP's consistent income streams which provide stable returns."
The company floated on the Alternative Investment Market in 1996 and achieved a main listing on the LSE in 1998. In 2007 it converted to a REIT and became the UK's first dedicated healthcare REIT.
This article was written for our sister website Money Observer
Investment trust
Investment trusts are companies that invest money in other companies and whose shares are listed on the London Stock Exchange. As with unit trusts, private investors buying shares in an investment trust are buying into a diversified portfolio of assets (to reduce risk), which is managed by a professional fund manager. Investment trusts differ from unit trusts in two important ways: they are listed on the stockmarket and so are owned by their shareholders and are closed-ended funds with a finite number of shares in issue. This means the share price of investment trusts might not reflect the true value of the assets in the company (known as the net asset value, or NAV) and if the NAV value of a share is £1 and the share price in the market is 90p, the trust is said to be running a discount of 10% to NAV. But this means the investor is paying 90p to gain exposure to £1 of assets. Investment trusts can also borrow money and use this money to buy investments. This is known as gearing and a geared trust is thought to be more of an investment risk than an ungeared one.
Estate
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
Alternative Investment Market
AIM is the London Stock Exchange’s international market for smaller companies. Since its launch in 1995, 2,200 companies have raised almost £24 billion listing on AIM. The market has a more flexible regulatory system than the main market and can offer tax advantages to investors but its constituents are a riskier investment than bigger companies listed on the main market.
