Primary Health Properties (LSE:PHP) and Universities Superannuation Scheme have raised the target size of their existing primary care joint venture to £400 million, up from £250 million, with potential to grow further to £800 million over time subject to additional approval.
The London-listed healthcare property investor also confirmed the joint venture has exchanged contracts on the transfer of £67 million of assets, part of a wider identified pipeline still to follow.
This is the same USS vehicle PHP flagged in July, when it agreed to transfer £103 million of assets into the venture for expected net proceeds of £82 million; the latest transaction is a disposal of nine primary care assets for gross consideration of £67 million, in line with book value, with net proceeds earmarked to reduce net debt.
PHP holds a 20% equity interest in the 20:80 structure, which invests exclusively in assets let directly to NHS or GP tenants with rents linked to inflation or fixed uplifts; following the latest transfer, the joint venture's assets exceed £250 million, surpassing its original target.
"We are delighted to be extending our successful joint venture with USS, which will enable significant further investment into critical healthcare infrastructure in the UK," said Mark Davies, chief executive of PHP, adding that future growth would come from further asset transfers and new investment opportunities including risk-controlled developments.
Alex Turner, head of property at USS Investment Management, said the pension scheme continues "to believe in the robustness of the healthcare sector" and is investing further into primary care.
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The announcement comes as PHP pursues a parallel restructuring of its private hospital portfolio, having agreed a conditional 50:50 joint venture with GIC seeded with 27 hospitals valued at approximately £0.7 billion, expected to complete in November and generate around £0.5 billion of net proceeds to repay variable-rate debt.
Fitch Ratings has reaffirmed the credit rating of Assura, PHP's acquired subsidiary, at BBB+ and revised its outlook to stable from negative, a move PHP attributed to progress made on both the private hospital and primary care joint ventures.
PHP named the Neighbourhood Health Centre programme, part of the NHS's 10-year plan, as a focus for future funding through the enlarged USS vehicle, alongside other healthcare assets let to the NHS.