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Public Service Properties Investments

  • BY: Andrew Hore |
  • POSTED: 27/03/2009 |

Public Service Properties Investments almost maintained its net asset value last year.

The care home properties investor’s NAV was 155.1p a share at the end of 2008, against 156.3p a share at the end of 2007. There was a decline in the value of the UK care home portfolio as well as US and Swiss assets. This was partly offset by a gain on the German portfolio, which was expanded during the year.

Shares in PSPI rose 3.5p to 39.5p a share, which values the property company at £26.4m. The shares are trading at a near-75% discount to NAV.

Rental revenues increased from £12.6m to £16.8m in 2008. After the £1.25m net loss on properties, PSPI reported a loss of £373,000.

Net debt is just over £150m. The loan to value figure is 56%. An acquisition facility of €13m needs to be renewed but the rest of the debt lasts until at least 2010.

Ralph Beney of investment manager RP&C International says that PSPI is keen to buy more care homes in Germany. PSPI bought 14 homes at a cost of €57m during 2008. These homes are operated by three different firms. Germany still has a significant proportion of care homes in public control. This is reducing and provides an opportunity but tenders tend to be competitive. Sale and leasebacks or retirement sales are the most likely ways of building up the portfolio.

The UK still accounts for the majority of the property portfolio and it is likely to stay that way for the time being – it is currently three times the size of the German portfolio. All the UK properties are operated by European Care Group, the sixth largest UK care home operator. The homes themselves are operated by subsidiaries which are not allowed to take on significant borrowings. This makes the exposure to one operator slightly less risky.

PSPI has a strong rental income and this has enabled it to declare an unchanged total dividend of 6p a share for 2008.

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