24 October 2023
Primary Health Properties PLC
("PHP" or the "Company" or "Group")
Q3 2023 Trading Update and Completion of Secondary Listing
Rental growth continuing to drive performance and dividend growth
Primary Health Properties PLC, one of the UK's leading investors in modern primary healthcare facilities, today publishes a trading update for the third quarter of the year to 30 September 2023 ("Q3 2023") and announces the completion of its secondary Listing on the Johannesburg Stock Exchange ("JSE").
Secondary Listing
The Company is pleased to announce that the listing of PHP on the JSE is effective as of 8.00am today. The Board of PHP believes that the secondary listing will contribute to liquidity in the Group's shares as a result of the growing interest in the Company and its increased profile in the South African market, where a number of investors have already shown strong interest in the unique healthcare property investment opportunity.
Rental growth
In the nine months to 30 September 2023 the Company generated an additional £3.3 million (Q3 2022: £2.4 million) of extra rental income from its rent review and asset management activities, both in the UK and in Ireland.
The Company continues to see an improving rental growth outlook, in particular from rent reviews. An extra £3.1 million (Q3 2022: £2.3 million) of income was generated in the nine months from 243 reviews that have been settled, representing a 9.6% increase over the previous passing rent, equivalent to 4.4% (2022: 3.4%) on an annualised basis.
PHP remains on course to generate in excess of £4.0 million (2022: £3.0 million) of extra income from rent reviews in 2023 driven by the impact of inflation on both indexed-linked and open market value ("OMV") reviews.
A further £0.2 million (Q3 2022: £0.1 million) has been generated from asset management activities where the Company has exchanged on five new projects, completed six lease regears and three new lettings. There is a strong pipeline of a further 26 asset management projects which, in addition to extending lease lengths and increasing rents, will improve the environmental performance of the buildings.
Investment and development
As previously announced, the Group has agreed to acquire one of Ireland's first Enhanced Community Care ("ECC") facilities at Ballincollig, near Cork, Ireland, for a total consideration of €29.6 million with completion expected imminently. The property is fully let to the Health Service Executive ("HSE") on a 25-year lease and benefits from five yearly, compounded annually, Irish CPI indexed rent reviews.
The property will be managed by Axis Technical Services, PHP's recently acquired Irish property management business, and the acquisition will increase PHP's portfolio to 514 assets, of which 21 are in Ireland, with a contracted rent roll of just under £150 million.
The Group continues to adopt a very disciplined approach to further investment and development activity, which will only take place if accretive to earnings. The future pipeline of opportunities continues to be focused predominantly in Ireland and PHP's existing portfolio through asset management projects.
Currently there is limited exposure to development risk with just one scheme on-site. The Group is in the process of renegotiating rental values with several Integrated Care Boards across the UK to maximise the financial viability of schemes in our pipeline, given the current economic and interest rate environment.
Financing
As at 30 September 2023 the Group's net debt stood at £1,277.1 million (30 June 2023: £1,269.8 million) and on a pro-forma basis the Loan to Value ("LTV") ratio was 45.8% (30 June 2023: 45.6%). The Group has £282 million (30 June 2023: £314 million) of undrawn loan facilities available, net of capital commitments. 97% of the Group's debt is fixed or hedged at a weighted average cost of 3.3%.
Dividend
On 5 October 2023, the Company declared its fourth quarterly interim dividend of 1.675p per Ordinary Share which will be paid on 24 November 2023 to shareholders who were on the share register at the close of business on 13 October 2023. The dividend will be paid by way of a property income distribution of 1.34 pence and a normal dividend of 0.335 pence. The dividend is equivalent to 6.7p on an annualised basis and represents a 3.1% increase over the 6.5p paid in 2022.
https://www.investegate.co.uk/announcem ... ng/7835243I hold PHP and have (boldly!) topped up twice this year. The results look good. Cost of Debt 3.3%