TIDMPHP
RNS Number : 0111R
Primary Health Properties PLC
24 October 2023
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 GBP3.3 million (Q3 2022: GBP2.4 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 GBP3.1 million (Q3 2022:
GBP2.3 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 GBP4.0 million
(2022: GBP3.0 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 GBP0.2 million (Q3 2022: GBP0.1 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
EUR29.6 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 GBP150
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 GBP1,277.1
million (30 June 2023: GBP1,269.8 million) and on a pro-forma basis
the Loan to Value ("LTV") ratio was 45.8% (30 June 2023: 45.6%).
The Group has GBP282 million (30 June 2023: GBP314 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.
MSCI's Highest 10-Year Risk Adjusted Total Return Award
During the period, PHP was announced as the winner of MSCI's
Highest 10-Year Risk Adjusted Total Return Award for the UK in
2022; the second year in succession having also received the award
in 2021. The award reflects the Group's continued operational
resilience and security of its predictable income stream which
underpins its progressive dividend policy as PHP completes its
27(th) year of continued dividend growth.
Board succession and changes
As previously announced, Mark Davies will succeed Harry Hyman as
Chief Executive Officer of the Group at the conclusion of the next
Annual General Meeting ("AGM") in April 2024. As part of the
handover process Mark will work alongside Harry from the start of
next year.
Harry Hyman, Chief Executive Officer of Primary Health
Properties, commented:
"We continue to focus on income growth from our existing
portfolio and are encouraged by the growth already seen in the year
to date. Furthermore, with 97% of PHP's debt either fixed or
hedged, a strong control on costs, a disciplined approach to
capital deployment and just one development on site we have limited
exposure to further cost increases and development risk.
"The increasingly firmer tone of rental growth is positive and
we believe in the medium term that PHP will be a beneficiary of the
current inflationary environment both through open market and
index-linked reviews.
"Future rental growth will be key to underpinning both the
operational performance and valuation of the Group's portfolio in
the ongoing turbulent economic and interest rate outlook caused by
both global and domestic events.
"We are delighted that PHP's shares have started trading on the
South African JSE today and are pleased by the positive reception
from the investors we have met so far. This is a significant
milestone that demonstrates the international attraction of PHP's
equity story as we grow and become a global healthcare investment
opportunity. The resulting impact on Group's liquidity will benefit
all of our stakeholders as we continue to deliver sustainable long
term income growth."
For further information contact:
Harry Hyman Richard Howell
Chief Executive Officer Chief Financial Officer
Primary Health Properties PLC Primary Health Properties
T: +44 (0) 7973 344768 PLC
E: harry.hyman@phpgroup.co.uk T: +44 (0) 7766 072272
E: richard.howell@phpgroup.co.uk
David Rydell/Stephanie Whitmore/ Verity
Parker
Buchanan Communications
T: +44 (0) 20 7466 5000
E: php@buchanan.uk.com
--------------------------------------- ---------------------------------
Notes to Editors
Primary Health Properties (LSE and JSE: PHP) is a leading
investor in modern primary healthcare properties across the UK and
Ireland. Since listing on the London Stock Exchange ("LSE") in
1998, it has created progressive returns for shareholders through a
combination of rental growth and capital appreciation, generating
27 years of consecutive dividend growth.
Its primary listing is on the Premium Segment of the LSE and is
included on the FTSE 250 Index. It has a secondary listing on the
South African JSE LIMITED ("JSE").
The Group owns and manages a GBP2.8 billion portfolio of
healthcare assets that generate strong, high quality rent roll of
just under GBP150 million. Its internal management team delivers
sector leading financial management, with the lowest peer cost
ratios. In particular, PHP is positioned for growth in the emerging
Irish market following its 2023 acquisition of Axis Technical
Services, the Irish property management business.
PHP's long-term leases offer unique security with c.90% of
rental income directly or indirectly backed by the government, via
the NHS in the UK or HSE in Ireland. Growing and ageing patient
populations are placing increasing and significant pressure on the
government's under-invested healthcare systems; the provision of
better front line primary care offers a proven solution. The Board
has a strong commitment to responsible growth and has set out a
clear plan to transition operational, development and asset
management activities to Net Zero Carbon by 2030.
Further information about PHP can be found here:
https://www.phpgroup.co.uk/
Legal Entity Identifier: 213800Y5CJHXOATK7X11
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UPDMJBATMTITBMJ
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