Primary Health Properties PLC (LON:PHP) has agreed to acquire its management company Nexus Tradeco for £33.1mln, of which half will be paid in cash and a half in shares.
PHP said the acquisition will boost adjusted EPRA earnings per share, albeit with some NAV dilution, and save around £4mln per year in costs.
The improved earnings will also allow PHP to pay higher dividends while securing the management team including Harry Hyman, the REIT’s chief executive.
PHP added the acquisition also removes potential or perceived conflicts of interest between Nexus and PHP and its reliance on a third-party adviser.
The REIT added that momentum is growing within the NHS for the approval of new medical centre developments and, if PHP has its own capabilities in development, it will be a more attractive partner for such new development opportunities.
Steven Owen, the chairman said: “We believe that now is the right time to internalise this relationship and secure the well-regarded people, systems and structure of the Nexus operations, in a move which will deliver material financial and operational benefits to PHP.
“The new structure will deliver material annual cost savings, driving immediate EPRA EPS enhancement to further shareholder returns, whilst simultaneously broadening our appeal to a wider investment community.”
Shares to be issued as part of the acquisition have been priced at 144.1p, compared to the market price of 139.4p today.