Good morning. Thank you for joining us. We are here today at a very exciting time for our company on the day of publishing a very strong set of results. We recently completed the transformational merger with Assura PLC. In a short space of time, we have made great progress delivering the strategic and financial benefits of this transaction. Since our well-received trading update on the 13th of January, we've made further progress on our strategic priorities. I'll bring you up to date on that today, plus share with you our well-progressed discussions with joint venture partners on our primary care and private hospital assets. You will also see from our presentation later. There are a number of positive learnings from our enlarged portfolio review, and the further upside we can see will deliver value in the future.
This has been a transformational year, and this is a strong set of results. I've already alluded to the positive impact of the combination with Assura, and I'm delighted to say that despite doubling in size, we've retained a focus on delivering growing returns for shareholders on both an absolute and a per share basis. We've delivered 4% growth in adjusted earnings per share, and our dividend remains fully covered. This was achieved through over 3% growth in rental income, which was slightly ahead of the guidance we laid out at our Capital Markets Day in July. We've maintained a close control of costs, where our EPRA cost ratio is below 10% and the strength of our capital structure remains with a 3.7% cost of debt, most of which is on a fixed basis.
We are pleased to be reporting a GBP 48 million valuation gain in the year, with yields stabilizing in the second half of the period, providing clear evidence we are invested in a stable and secure asset class in a sector with structural growth. EPRA net asset value per share, NTA, was reduced by one-off transaction reasons, principally due to the share exchange ratio and the transaction costs incurred, but increased on an underlying basis following the valuation gain in the year. Adjusted NTA, which reflects the positive fair value of our long-term fixed-rate debt, stands now at 104p. Richard will walk us through the detail on this shortly.
All of this leads to confidence in our outlook to announce a further 3% increase in our dividend to GBP 0.073 per share for 2026, which I'm pleased and proud to say is our 30th consecutive year of dividend growth. We enter this year with a portfolio that offers secure, long-term, and growing income with 99% occupancy, a long 11-year WALT, and nearly 80% of our recurring income from government-backed occupiers delivering essential healthcare services as demand for investment in healthcare infrastructure continues to grow. Next, to give you an update on the good progress in the short period that we have had management control of Assura. You'll remember that we got overwhelming support from Assura shareholders in August, but the CMA only completed their review, helpfully with no conditions, at the end of October.
In the four and a half months since then, we have made very good progress. The integration of the two businesses is progressing ahead of schedule, and we are delighted with the quality of the portfolio acquired and the people who we are retaining. We are ahead of schedule with over 80% of cost synergies, GBP 7.5 million, already delivered. The integration is now expected to complete ahead of schedule by the end of June, only a few months away. In addition to the synergies announced, we have identified further upside potential from the portfolio. Our other immediate focus is on deleveraging. As I'll come onto shortly in more detail, we've made strong progress, both in terms of moving assets into our existing joint venture with USS and establishing a new joint venture for our private hospital portfolio.
Our portfolio, which now stands at GBP 6 billion of critical infrastructure healthcare assets, is well-placed to benefit from organic rental growth across both open market reviews, which continue to show a steady upward trajectory, and the 40% of our portfolio which has index-linked or fixed reviews. The portfolio is extremely well-positioned with good market share in healthcare markets which deliver social value to local communities across the U.K. and Ireland, plays to the changing demographics of an aging population with growing healthcare needs, and supported by the political will to move health services out of hospitals into community-based locations.
We are very pleased that via the Assura transaction, that we've inherited a primary care joint venture with USS, who are a large superannuation scheme with GBP 77 billion worth of assets under management and a lower cost of capital. With an aligned strategy in healthcare infrastructure assets, and a commitment to deliver positive social impact. Over the last four months, we've enjoyed getting to know the team at USS, working closely together, and we are confident this will be a prosperous and long-term partnership for all parties. To reaffirm our confidence, we've already agreed commercial terms on GBP 103 million of assets in U.K. Primary care, and subject to final due diligence, this transaction is expected to complete in Q2 2026, which takes the JV AUM to around GBP 0.3 billion. There are a number of significant benefits to this partnership.
Firstly, the JV provides an alternative source of capital at an efficient cost. Secondly, our JV partner also shares our confidence in the long-term growth prospects of our sector, and there is a strong willingness to grow and scale up this JV in the future, which will include dedicated strategies around neighborhood health centers, LIFT projects, and other NHS infrastructure assets. Finally, the JV is a great enabler of new development opportunities in primary care. It's worth noting, in only a short period of time, the joint venture has two new developments on site in Weston-super-Mare and Tetbury, with three in the pipeline. This risk-controlled development strategy allows us to produce vital rental evidence to unlock future rental growth in the future.
Just to remind everybody that PHP has a 20% interest in this joint venture and is the asset and development manager and therefore receives management fees for its services, which generate a higher return on capital. To conclude, we are very happy with the USS joint venture on primary care assets, and this has the ability to get to GBP 400 million of assets under management and beyond in the future. Now moving on to our private hospital portfolio. Firstly, I'd like to point out that as you can see from our results this morning, our GBP 0.7 billion of private hospital assets are performing very strongly.
During the several months of our ownership, we've seen rent cover improve, and we're seeing the benefit of owning assets in the sector with inflation-linked long leases, leading to a guaranteed growth in income and an ability to capture further upside through asset management and development. We feel that the best strategy for private hospitals going forward is to work with a highly credible joint venture partner to unlock these opportunities with scale and expertise. We know from the discussions that have taken place over the last few months, there are a higher number of institutional investors who are underweight in U.K. healthcare who want access to a higher earnings yield and rental growth. We have four credible offers that we are evaluating, and we expect to make a decision on our preferred partner soon, whilst they and we continue to undertake due diligence.
There is a high degree of confidence that these assets will deliver double-digit total returns. Hence, the quality of the counterparties we are in discussions with reflects this. When we have selected our new partner for our private hospital joint venture, and with the work that's already been done and the progress that's been made, we expect to complete this transaction in the summer, just a few months away. Because the private hospital market continues to grow, and there are opportunities that we are aware of which will deliver future value, we want to ensure we choose the right partner and the right structure.
For the time being, the capital that we release from undertaking this transaction will allow us to deliver in line with our financial policies to delever, and we're looking forward to seeing our shareholders over the next few weeks, so we can obtain a feedback on our strategy in this high-performing asset class. We do feel that retaining an exposure to the private hospital portfolio will allow future value creation to be captured by our shareholders. Before I pass on to Richard, I wanted to take the opportunity to remind you all of the financial policies of the enlarged business going forward. These policies make sure we make decisions about our business that are aligned with our strategy and are incremental to earnings and retaining high quality, growing cash flows. We do this in a disciplined way.
It's worth pointing out that we have an 80%-90% government-backed income target. We are currently at 76%, but when we have completed our private hospital joint venture, this will get us back in line with policy. We've always had a focus on organic rental growth and continue to target +3% to deliver sector-leading, risk-adjusted total returns. We are currently delivering above this level, and the long-term prospects for our sector are compelling. On the capital structure side, we are targeting strong investment-grade credit rating of BBB+ or better. This will be achieved by meeting our LTV target of 40%-50% and a net debt- to- EBITDA below 9.5x.
Because of the stability of our asset value and security of income, we can be afforded to be above these levels as a temporary position following the Assura transaction. The strategy I presented on joint ventures is the most effective way to get there, and we are confident of achieving our target of strong investment grade later this year. At this timely point, I'll pass you to Richard, who will present the financial results.
PHP has now entered its 30th consecutive year of dividend growth, and last week we announced a second quarterly dividend of 1.825p, equivalent to GBP 0.073 on an annualized basis, an increase of just under 3% on 2025's dividend. Adjusted earnings in 2025 were driven by four and a half months of income arising from the combination with Assura, which completed in August, adding GBP 39 million of additional income to adjusted earnings, which increased to GBP 131 million. This resulted in adjusted earnings per share of GBP 0.073, an increase of just over 4%.
Like-for-like rental growth generated an extra GBP 9 million of income, an increase of 7% over the previous passing rent, or just over 3% on an annualized basis, driven predominantly by the improving rent review performance, with growth on an open market basis also continuing to improve. The underlying portfolio generated a valuation surplus of GBP 48 million, driven by rental growth, which generated an extra GBP 72 million of value, offset by 3 basis points of yield expansion in the year, or a deficit of GBP 24 million. The yield expansion all happened in the first half of 2025, with the group's net initial yield remaining flat in the second half, albeit the overall yield moved slightly, reflecting a change in the composition of the portfolio following the combination with Assura.
We've continued to maintain a tight control on costs, with an EPRA cost ratio of just under 10%, a reduction of 30 basis points in the year, and this is expected to fall further, closer to 9% in 2026, as the GBP 9 million of cost saving synergies arising from the combination flow through to earnings. The investment portfolio now stands at GBP 6 billion, resulting in an EPRA net tangible asset of GBP 0.99, down 4%, reflecting the one-off transaction costs and the impact of the exchange ratio agreed on the combination with Assura. The portfolio continues to benefit from the strong fundamentals, with 99% occupancy, 11-year WALT, and 76% government-backed income, supported by a strong demographic and political backdrop.
Looking at the movement in the net tangible asset in a bit more detail, the key impact in the movement in the year is the acquisition of Assura, which had a negative impact of GBP 0.06. GBP 0.03 arose from GBP 72 million of acquisition costs incurred by both Assura and PHP, and GBP 0.03 from the exchange ratio offered as part of PHP's final offer. It is worth noting that the transaction costs include over GBP 8 million of Stamp Duty incurred to acquire the shares in Assura, but this saved over GBP 150 million, or GBP 0.06 per share, in Stamp Duty that would have been incurred if we had purchased the Assura portfolio in the open market.
Earnings of GBP 0.073 fully covered it, fully covered the dividend paid of GBP 0.071, and a GBP 48 million revaluation surplus equivalent to GBP 0.02 per share, resulting in a year-end net tangible asset of GBP 0.99. If we add on the mark to market of the fixed-rate debt not recognized under IFRS accounting, equivalent to GBP 0.05 per share, the adjusted NTA is GBP 1.04, which is a true value of the enlarged group for investors to consider.
In 2025, we received strong support from the credit markets for the combination with Assura, with a record amount of financing activity, including a GBP 1.2 billion unsecured bridging facility to fund the transaction, refinancing GBP 357 million of Assura private placement debt, and we worked with Fitch to reconfirm Assura's credit rating post-merger at BBB+, avoiding any change of control on their low coupon GBP 900 million of listed bonds. The enlarged group's LTV now stands at 57%, with a low average cost of debt of 3.7%, and a net debt- to- EBITDA ratio of just over 10x. The enlarged group has total debt facilities of approximately GBP 4 billion, of which GBP 3.4 billion is drawn, providing just under GBP 0.6 billion of liquidity headroom after capital commitments.
As discussed by Mark, we have a clear strategy to get our leverage back below 50%, and net debt- to- EBITDA ratio back below 9.5 x. The two key deleveraging priorities include the transferring of primary care assets to USS JV, worth GBP 103 million, and establishing a new private hospital joint venture. Both of these initiatives are expected to realize around GBP 700 million of proceeds and reduce leverage back to 50% on a pro forma basis. The proceeds from deleveraging initiatives will be used to partially repay the GBP 1 billion acquisition and other facilities across the group. PHP has now committed to becoming unsecured, and consequently, we have commenced negotiations to refinance the balance of the acquisition facility not repaid from sales to JVs, along with PHP's and Assura's existing revolving credit facilities.
We have recently received, in the last few weeks, offers from eight banks to form a new club term and revolving credit facility worth GBP 800 million, with maturity profiles spreading over three and five years, with further extension options. Commercial terms are currently being finalized, and documentation is expected to commence shortly, with the aim that this completes later in the second quarter of 2026. The new facility will provide the group with approximately GBP 300 million of undrawn liquidity headroom and will deliver further reductions in the current credit margins of approximately 30 basis points. We are also in the process of establishing ability for PHP to access the listed bond market and are currently documenting an EMTN program, which will allow us to tap the bond market repeatedly over time in the future.
Following completion of the above refinancing initiatives, we expect the average cost of debt to remain broadly unchanged at 3.7% based on current interest rates, with the lower credit margins offsetting the recent increases in gilt and swap rates. We continue to be encouraged by the improving organic rental growth generated by the portfolio. In 2025, we delivered an extra GBP 9 million of rental income, derived mainly from rent review activities, which delivered annualized growth of 3.2%, slightly ahead of previous guidance at 3%. Importantly, open market reviews delivered an uplift of 6.5% over the previous passing rent, or 2.1% on an annualized basis, up from 1.9% in 2024.
We've already completed the integration of the two rent review teams and are now sharing rent review evidence across the enlarged portfolio, which will assist with future rent negotiations and a significant synergy for the enlarged group. The portfolio is currently let at a low weighted average rent of GBP 200 per sq m , and our asset management activities are seeing rents rebased with uplifts of around 15% being achieved. Five new developments completed in 2025 delivered an average rent of GBP 260 per sq m , with the current development pipeline across six schemes seeing rents being rebased even higher at a weighted average GBP 280 per sq m . This new rental evidence clearly sets a positive outlook for future rental growth, and we continue to target growth in excess of 3%.
PHP has now achieved its 30-year anniversary of consecutive dividend growth, and we approach the future determined to continue to grow earnings to support the group's progressive dividend policy on a fully covered basis. There are three key pillars to achieving future earnings growth. Firstly, a portfolio with a strong reversionary potential that will deliver future rental growth, supported by the security of our long-term, predominantly government-backed income stream and long-term occupier retention rates. A strong focus on cost control with one of the lowest EPRA cost ratios in the sector, and we are well on the way to delivering the GBP 9 million of cost saving synergies expected from the merger, which should result in EPRA cost ratio close to 9% in the future. A strong track record in balance sheet liability management with good access to various sources of capital.
Notwithstanding the recent increases in interest rates and volatility, we still expect to be able to maintain the group's average cost of debt close to the current 3.7% once we've completed the various refinancing initiatives that are in hand. I will now hand you back to Mark, who will take a closer look at the group's property portfolio.
Thank you, Richard. PHP now operates in three resilient healthcare markets. I'd now like to spend the time highlighting the attractiveness of the healthcare markets in which we operate, markets that we believe will continue to deliver structural growth in the future. As many of you will know, the majority of our portfolio is primary care assets in the U.K. Since 2016, PHP has also built the leading primary care portfolio in Ireland, and the merger with Assura saw us inherit a portfolio of private hospitals. The Assura team that have come across to PHP have a leading expertise in private hospitals, having invested in the space for nearly 10 years. What we highlight to you on this slide is fundamentally strong investment characteristics of each of these markets.
Strong demand, fundamental tailwinds in the market, long leases as standard, tenants offering a secure covenant, rental growth with inflation linkage, high quality community-based assets which are well invested with high return prospects. Crucially, all three of these markets can be accessed using PHP's unique position in the healthcare market, which will be enhanced through our best of both approach to the merger, and we have a good market share, giving us size and scale advantages. The state of the NHS and the pressure it is under is well documented. This chart shows the elevated levels of NHS waiting lists, which have remained high for a sustained period post-COVID, with no signs of a swift drop. The solution is similarly well-recognized, the need to move services to the community and out of NHS hospitals, which face continued pressure of inefficient processes, inadequate buildings, and underinvestment.
This is documented in the NHS' own 10 year plan, backed by the government's clear priorities of hospital to community, which is aimed to improve the healthcare service and save the NHS money. The 2025 Autumn Statement supported this with a plan to build 250 neighborhood health centers. PHP is well-placed to support the investment in these assets and the need for better primary care facilities in communities, whether through new build developments, improving existing assets, the creation of diagnostic hubs, and the increasing use of private hospitals. In the last few weeks, we've met with senior government officials, including the health minister, to discuss how PHP can play a key part in the delivery of the plan. As the leading investor, manager, and developer of healthcare infrastructure, we are an important stakeholder.
The opportunity for the private sector to help our healthcare system continues to grow. The market has several well-established operators with clear and profitable business models that have seen sustained growth across the three channels of private medical insurance, NHS referrals, or self-pay patients. The chart here shows how private sector revenues have more than doubled since 2010. However, the number of hospitals has only increased by 5% in the same time. This has driven an improvement in profitability and rent cover, but it also means there are opportunities for expansions and investment, including development at a time of growing demand and a lack of supply. PHP has the team and the capabilities to benefit from this growing market. Following the merger, PHP has enhanced capabilities to unlock future growth.
As we've gone through the integration, we've applied a best-of-both approach to ensure we've expanded our skill set and opportunities. In asset management, PHP's long-standing track record and approach has been enhanced with access to knowledge, skill set, and relationships of our enlarged team. We can apply this relationship-based approach to a greater number of assets in each region to drive further opportunities and generate greater rental evidence to benefit our portfolio through income growth and value creation. In development, our skill set has been strengthened and pipeline has grown, not just in the U.K. primary care, which we can unlock financially through utilizing our joint venture to fund, but also in private hospitals, which offer greater scale of opportunity and stronger returns. PHP has long-standing credentials in asset management and continues to deliver at a time of change and opportunity.
In the past year, we've exchanged on 49 projects across asset management, lease regears, and new lettings. Moving forward, we have 51 projects in the advanced pipeline, with many more in the earlier stages of negotiation. We're talking about relatively small amounts of capital invested, but the prize is the rental evidence that is created, as Richard has already highlighted. These schemes at Sprowston in Norwich, which completed during the year, and Ryalls Park in Yeovil, which is currently on site, are both quite similar and reflect a sample of some of the good work undertaken by the team.
Just over GBP 1 million of capital has been invested in each, refurbishment and improvement of existing space undertaken, and a small but meaningful extension to the property, crucially offering an ability to provide a greater range of services to a greater number of patients in a growing local population and an increase in rent. In both cases, the rental evidence will be set at circa GBP 220 per sq m , consistent with the rate across our advanced pipeline, providing evidence for our wider portfolio and an ability to drive rental growth across a larger portfolio, proving the benefits of scale. As I mentioned, our development capability set has strengthened following the merger, and we have an exciting and growing set of opportunities.
In the U.K., we're on site with schemes at Weston-super-Mare, which is earmarked to be one of the first new-build neighborhood health centers, and Tetbury, which both set attractive rental evidence. These are both within the existing joint venture, meaning PHP's capital contribution is only 20%, but our returns are boosted by fees for development and asset management, and we see the joint venture as an avenue to unlock a growing number of U.K. schemes in primary care. In Ireland, we have three primary care schemes on site and EUR 60 million of potential schemes in the pipeline. As well as offering slightly stronger returns, these are boosted by the ability to fund with euro debt, which generally has lower borrowing rates than sterling.
In private hospitals, we have a GBP 21 million development scheme on site in the U.K. and a number of potential pipeline schemes in the early stages. This is a fast-growing market which has the potential to offer high returns, which we can access through our private hospital joint venture, and our preferred partner will share our ambition for growing the size of the portfolio. We also acquired our first private clinic asset in Ireland during 2025. PHP's disciplined approach to development, however, has not changed. It will remain risk-controlled with a focus on returns, and we will only undertake opportunities with a low level of risk, meaning fixed-price construction contracts with tenants signed up to long leases prior to capital being deployed and construction commencing.
Before I reach my concluding remarks, I wanted to remind you of the PHP investment case, which has been significantly enhanced by the transformational merger with Assura and our lower cost of capital going forward. Many of you will be familiar with the specific points on the slide, so I won't go through each and every one. Our portfolio of modern healthcare infrastructure assets offers investors the rare opportunity to access a specialist asset class with exceptionally high-quality cash flows in a resilient healthcare market that is a growth sector. Over a sustained 30-year period, the management team has demonstrated an ability to deliver sector-leading financial performance and returns for investors. This is an exciting time for PHP shareholders. The strength of the platform is second to none, and the future growth prospects are compelling.
This is a strong set of results, and 2025 was a transformational year. We've established the U.K.'s largest listed healthcare REIT, and this is our 30th year of consecutive dividend growth. Integration is already delivering. A best-of-both approach is leading to a very strong platform. We're highly confident in hitting the GBP 9 million synergy target in the next few months, and deleveraging remains the priority, where we have a clear plan to do this through joint ventures. We are well-placed to continue delivering shareholder returns, and the combination has brought a deeper capability set, a larger pipeline, and more opportunities. Improving rental growth outlook, which will be needed to fulfill the NHS 10-year plan and invest in community healthcare. Owning healthcare infrastructure assets will deliver long-term sustainable growth. Thank you for taking the time to attend our presentation, and we'll now open the floor for questions.
Thank you. Ladies, and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. We'll pause for a brief moment. Thank you. We will now take our first question from Max Nimmo of Deutsche Bank. Your line is open. Please go ahead.
Morning, guys. Thanks very much for the presentation. Just a couple on the deleveraging process. The ambition to get to GBP 400 million in the USS JV, do you have a timeline for that? Is that something, you know, if we get this transaction done today by the midpoint of the year, could we see another transaction in the second half of the year? The second one, if I can, just following up on the private hospital portfolio, it's really encouraging to see that there's, you know, at least four credible parties there that are interested to invest in that. Could you think about doing a club deal on this?
You know, potentially doing with multiple partners, which might eventually lead to a bigger fund overall. Just interested to get your views on that. Thank you.
Morning, Max. Thanks for your feedback and thanks for your questions as always. I'll pick up both of those. Yeah, I mean, deleveraging is obviously a key priority for management right now, and we were pleased to, you know, present those two slides to you on the USS JV and the progress that we're making on the private hospitals. On timeline, we've obviously announced this morning the progress that we've made with USS, and we expect to get that done by our half year in June. That will take us to about GBP 0.3 billion of assets under management. The JV was set up with a capacity of GBP 0.4 billion. So there's clearly capacity there that we can grow into.
We're working with a very, you know, willing partner who shares with us the potential value creation in this sector, but also the importance of, you know, owning critical social healthcare infrastructure assets. We'll get that transaction done by the midpoint. In terms of the ability to grow the joint venture with USS from that point beyond, we're not saying anything about the ability to do anything just now in the second half. What we can say with confidence, because we've spent a lot of time with the USS team, getting to know them better, understanding their strategy for this vehicle going forward, and they have a strong desire to grow this JV to a more significant size and scale.
We can do that together, looking at obviously existing assets that we now own, of which we own, you know, double the size portfolio that we did until very recently. We also know from discussions that we've had with USS that they share our ambition to look at neighborhood health centers, LIFT projects coming down the line, and other healthcare infrastructure assets. We'll say more on that in due course, Max. In the meantime, we're just focused on getting this initial tranche of assets over the line and being able to do that with confidence by the midpoint of this financial year. Moving on to the private hospitals. Yeah, you're right. It's very positive that we are talking with four highly credible counterparties about the prospect of doing this private hospital joint venture.
I think we're reassured by the quality of the partners, but also their desire to invest capital into healthcare infrastructure assets because they see the you know the valuation upside, and the growth that can be captured from investing alongside us, in the future. In terms of the second part of your question and whether we would do this on a club basis or on a bilateral basis, I think it's far more likely we would do this on a bilateral basis. We'll keep our options open. We are you know completing our own due diligence while our partners complete their due diligence. Timing-wise, we'd like to be in a position where we can choose a preferred partner before the end of March, and certainly no later than the end of April.
On that basis, we're confident we can get that transaction closed out again, you know, aligned with the USS joint venture, by the midpoint of this year, i.e. we're targeting the end of June, and certainly no later than the summer of this year, which is ahead of our original timetable that we set out at the time of the Assura merger last year.
That's great. Thank you very much.
Thank you, Max.
Thank you. We'll now take our next question from Matthew Saperia of Peel Hunt. Please go ahead.
Thank you. Morning, gents. Two quick questions from me. The first one, a follow-up to Max's question about the private hospitals joint venture. Could you just talk about the characteristics that you'll use in choosing one of the four potential partners to progress with? And then the second question, probably for Richard. Richard, you talked about establishing an EMTN program for public bonds. Can you just talk about how progressed you are on that and sort of what the timing might be around accessing the bond market? Thank you.
Thank you, Matt. Thanks for your comments and questions as always. I'll pick up the first question, and then I'll pass on to you, Richard, if that's okay, to pick up the second question. Look, on private hospitals, we've obviously done a lot of work on this since when we last saw you, hence the confidence in the statement this morning. In terms of, you know, the characteristics, we first of all wanna make sure we're choosing the right partner. Secondly, obviously we wanna do the right deal and do that in the right structure. Often this comes down to price, and we're confident that we can get this transaction done at or close to book value.
We will inevitably be seeking a partner that shares our ambitions to invest in this sector, a partner who sees the high returns that can be achieved through income growth, asset management, and development. We think we can see, you know, from the learnings that we have, having owned these assets now for several months that double-digit total returns are achievable, and our partners who we are talking to, you know, share that ambition. The capital that we're talking to, I would describe as more sort of core and core plus type capital. Of course, you know, we know, as we've said in our statement this morning, that there will be further opportunities, not just within the existing portfolio, but also further opportunities down the line.
We wanna work with a partner who has a desire and the capacity to grow this vehicle with size and scale, is a great alternative source of capital for us, but also a partner that can deliver great returns to all investors who participate in this joint venture going forward. I would say those are the most important consideration. Obviously, we won't be talking about the four names in detail today because they are commercially sensitive. I can say with confidence, these are four highly credible partners who, like us, see the benefits of owning critical healthcare infrastructure assets. Richard, do you mind picking up the second follow-up question?
Yeah, sure. Regarding a future bond issuance program, obviously the immediate priority is to deliver the deleveraging, get that back to 50% LTV. Probably at that stage, we will then look to publish a credit rating, which will enable us then to access the bond market. We should like to happen in the second half of the year once we've completed the transactions and the transfer of assets to the joint ventures that Mark's been through in some detail. Meantime, we're obviously trying to refinance PHP's secure revolving credit facilities with a new club facility which went through earlier in some detail.
That will obviously, you know, take us a long way on the step to maintaining our sort of low cost of debt and sort of benefiting from some of these lower credit margins that we're seeing in the market at the moment.
I think, Matt, just to finish up on Richard's point, you know, one of the unintended benefits of the Assura transaction is it's taking us on this journey to unsecured financing, which we'd set out, you know, at a Capital Markets Day well before the merger. That access to, you know, not just lower credit margins, but lower capital generally is. It's usually, I think, beneficial to the business going forward.
Thank you very much.
We'll now take our next question from James Carswell of Peel Hunt. Please go ahead. Your line is open.
Morning. Thanks for the presentation. Just a quick question on the development side. I mean, it feels like you're a bit more optimistic in terms of the kind of feasibility of those developments. Maybe just an update on, you know, those kind of conversations you've been having with various NHS bodies about rental levels. Then, I mean, do you think we should start to expect some more developments to come in from that pipeline in the short to medium term? Then just the final question, the kind of feed through that could have on rental growth. It looks obviously the open market rent reviews, the annual uplift's been ticking up now from a pretty gradual basis for many years, which is great to see. Is there a chance that could start to accelerate?
Could that be in the relative short term if indeed we do see those developments coming through? Thank you.
Thanks, James. Appreciate the question. Yeah, you're right. We are, you know, way more optimistic, I think, on the development side than you'll have seen from our company, perhaps historically. I think that's driven by a number of reasons. First of all, when we talk about the best of both from the Assura transaction, we have now taken on a team of new colleagues who have strength in depth and development capability and expertise to sit alongside our existing team. So that's giving us confidence. Secondly, the USS JV is a vehicle that's very well set up to accommodate new developments.
Our joint venture partner likes these assets, and their cost of capital allows and enables us to pursue these developments, which provide, as you pointed out, vital rental evidence in geographies and regions around the U.K. that benefit our portfolio as a whole. I think we should be optimistic about that. If you think about the two developments that we have on site currently, Weston-super-Mare and Tetbury in Gloucestershire, the three that we've talked about in pipeline, the USS joint venture is the vehicle, alongside the strength of the team that we now have that's giving us, I think, that confidence to create value through risk-controlled development opportunities. Do you wanna pick up on the specific point around the rental evidence and rental growth or?
Yeah. I mean, I think as we said in the presentation, we do see the rental growth outlook improving. In the first two months of 2026, we've seen rental growth across the enlarged portfolio increase to 3.4%. We're starting to see those positive trends coming through the rent review team's hard work.
Definitely. Yeah. I think just to finish on that, James, if I may, you know, if you look at the development pipeline that we are presenting this morning, not just in the U.K., we haven't even talked about Ireland, but, you know, in the U.K. and in Ireland and now private hospitals, that's a development pipeline that's perhaps longer than you will have seen from this company in the past. In the past, it's not cost us anything by having a limited pipeline because development, as we know, has been more challenging. Definitely that opportunity is there and it's really, I think, that rental evidence that's gonna really enhance our prospects the most. Yeah, very optimistic about that is, I think what we would conclude our remarks.
Brilliant. Thanks so much. Thank you.
Thank you, James.
Thank you. Once again, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Thank you. We'll now move on to our next question from Kanad Mitra of Barclays. Please go ahead.
Hello.
Morning.
Hello. Thanks for taking my question. On, again, continuing on the private hospitals JV, so just to clarify, what is the structure? Probably you are looking at what sort of economic interest would you be willing to keep in the JV? Also, another one on that is, will that be the whole hospital portfolio in one go or as things go with the USS JV will be in several tranches? The second question is on developments. I see there are a few developments that are going through with the USS JV. Is that the situation that's going to continue or do you also want to take on developments on a 100% PHP basis, going forward?
I think those are the two main questions that I have.
Thanks, Kanad. I'll pick up on those questions if that's okay. Yeah. In terms of the joint venture structure, how we think about joint ventures is as follows. We've got the primary care joint venture with USS. We have a 20% stake in that vehicle. That works very well for us. When we think about the private hospital joint venture, we would be very comfortable holding a 20% stake in that portfolio if that's where we were to end up. Or, if we were to conclude that it's in the company's better interest to retain a higher economic interest in that portfolio, you know, we could own as high as 50% interest or economic interest in that joint venture going forward.
We will retain flexibility at this point until we decide with our partner the route to which we will pursue. I can say that with the discussions that we've had and the offers that we have on the table currently, that we have optionality to take a 20% stake or a 50% stake or potentially somewhere in between. I think the company's preference would be to either do one or the other for reasons that we've set out in previous presentations. In terms of the second part of your question, whole or several tranches of transaction, I think there are two ways to answer that. I think the first part of that response would be the initial portfolio of around GBP 0.7 billion.
I would expect all of that, portfolio to go in at once, as a first tranche. There are other assets that we could look to add to that joint venture, from within the existing business, but we would do that in a second stage and currently that wouldn't be material. However, in the future, it's why I mentioned earlier on that it's important to work with the right partner who has flexibility and deliverability capabilities and a desire to share the benefits of scale and economies of scale in the future, then I think there could be further tranches and further opportunities to expand that joint venture, in the future. I think the third question or third part of your question, kinda it was around the development side.
Absolutely, you know, we're pointing out that the USS JV is really enhancing our ability to pursue new development opportunities in U.K. primary care. The JV, as established currently, has a very specific strategy, a very defined asset class that it looks to invest in. There is a possibility, as we've seen, in the last few months that PHP could pursue other development opportunities on a 100% basis for assets that do not meet the criteria for the USS primary care joint venture. For example, to simplify that response, the USS JV currently only takes inflation-linked assets. Any open market rent review opportunities and development, and we are seeing some coming through, we could pursue those on a 100% basis outside of the joint venture.
Perhaps, and there's more to say on that in the future, there's an ability to expand the USS JV beyond its existing mandate. That will take time, of course, and we're saying no more on that at this stage, and we'll provide further updates in due course. I think that answers all of your questions.
Yeah.
Yeah.
Thanks for taking my question.
Pleasure. Thank you.
Bye.
Thank you. We have no further questions on the line. I'll now hand over for webcast questions. Thank you.
Okay. We've got some questions. We've only got a couple that have come through on the webcast. First question's come in. There's a similar theme here, so I won't spend too much time on this. Andrew Saunders at Shore Capital. Thank you, Andrew. You said looking at the wider consideration of disposals outside of joint ventures, can you provide some color on the current investor appetite for primary health assets and give some indication of the possible disposal value you could achieve this year? Well, look, I guess the big event on primary care real estate assets over the last 12 months is, you know, global infrastructure funds in KKR and Stonepeak looking at this asset class and being prepared to pay book value.
I think that gives everyone a lot of confidence that the returns and the future prospects for our portfolio are very strong. We have actually sold a few assets, only a handful of assets, but importantly, at or above book value since the Assura transaction. We're confident and obviously we can see that through the USS discussions and the GBP 103 million of assets that we are injecting into that joint venture, that we're able to do that at book value or very close to book value. I think, you know, the indication is very positive that we can achieve disposal proceeds at or very close to our book value. Next question is coming in from Mike Prew at Jefferies. Morning, Mike.
Good to hear from you as always. Is the District Valuer's Office relaxing its rent review criteria? Is it making any direct capital contributions to development to make economically viable given high construction cost inflation? Yeah. Thanks, Mike. Look, I think this has been a recurring theme, as you know, for many years in our business. I wouldn't say that the District Valuer is relaxing any of its criteria, but we are, you know, beginning to see a response. You can see that in the like-for-like figures. You can see that in the figures that we've reported for the first two months.
Of course, these new developments that we're pursuing, particularly those in the USS joint venture, I think are particularly helpful to us in providing that rental evidence. In terms of the capital contributions that we're seeing coming through from local authorities, ICBs, other stakeholders to enable viable developments, we're not seeing the District Valuer move its position on that currently. It's our job to make that argument, and we think we can do that. I mentioned in an earlier slide that we've been particularly engaged with government officials, including a meeting with the Health Minister in the last few weeks, and we've been making these points, I think very, very credibly. More on that to come, Mike, I think.
I think we've got time. We have got quite a few questions that have come in a little late. I don't think we're gonna get through all of these. We'll do our very best. The first question's coming in from one of our retail shareholders, I think. Serge has asked, "Given the share price is above NAV, would you consider an ABB to decrease LTV and give you more firepower?" Yeah, Serge, thank you for that question. Look, management are considering all options at all times, of course. We wouldn't be doing our jobs properly if that wasn't the case. I think it's very clear from this morning's presentation and everything that we set out at the time of the Assura transaction last year, that our priorities are very clear.
To integrate the companies, to get the best of both, to deliver the synergies, and we're clearly ahead of schedule, over 80% of the way through now, of the GBP 9 million of cost synergies. Absolutely, we have a plan to delever. You know, the purpose of this morning's presentation, which is why we spent so much time on this on the two slides earlier, is setting out how clear that plan is and how confident we are of delivering that plan, ahead of our original schedule. We said we'd delever by the end of this financial year, which gives us to the end of December. We are, you know, ahead of where we thought we would be.
In spite of some of the, you know, challenging market conditions that we're all very aware of, this is a very resilient, robust, secure, and stable asset class, and the long-term prospects are very strong. Those are our priorities, and that's what we're focused on, right now. Next question's come in again from a, I think a retail shareholder. That question is: Is there a risk that recent geopolitical events delay negotiations with the parties for the private hospitals, JV and beyond? That's actually a really good question. Somebody asked me that, at the back end of last week, you know, given that we're, you know, over two weeks now into this conflict. We've not seen any change in appetite or desire to pursue this opportunity, at all.
We feel that reflects the resilient nature of this asset class and the growth prospects. Look, we're not immune to what's going on in the world. I think everybody on this call, and I think there's well over 150 people with us this morning, would share this. However, you know, we remain confident that the appetite is there and, you know, there's a willingness to invest alongside us in this very, you know, exciting opportunity in a high returning asset class with rental growth prospects, with upside from asset management and development. We'll just keep making those points, and I'm sure we'll get that transaction done. Look, we've answered all those questions that we were able to.
I'm very sorry we couldn't get through them all in the end. We'll respond to those during the day, either directly or indirectly. If I could just thank you all for taking the time to join us this morning. This is a strong set of results. It's been a transformational year. There's a lot going on. Management are very focused on delivering on the company's priorities. We will get there, and we will provide further updates in due course. I look forward to seeing many of our shareholders on our Investor Roadshow over the next couple of weeks. Thanks very much from Richard, myself, and the company.
Bye.