TIDMPHP
RNS Number : 6594W
Primary Health Properties PLC
19 April 2023
19 April 2023
Primary Health Properties PLC
("PHP" or the "Company" or "Group")
Q1 2023 Trading Update
Rent reviews driving performance, continued positive outlook
Primary Health Properties PLC, one of the UK's leading investors
in modern primary healthcare facilities, today publishes a trading
update for the period 1 January 2023 to 31 March 2023 ahead of its
AGM later today.
Like-for-like rental growth
In the first quarter of 2023 the Company generated an additional
GBP1.3 million or 0.9% (Q1 2022: GBP0.9 million or 0.6%) of extra
rental income on a like-for-like basis from its rent review and
asset management activities.
The Company continues to see an improving rental growth outlook,
especially from rent reviews, with an extra GBP1.2 million (Q1
2022: GBP0.6 million) of income generated in the quarter from 101
reviews that have been settled, equivalent to 3.7% (2022: 3.4%) on
an annualised basis.
Over the course of 2023, the Group anticipates rent reviews will
generate around GBP4.0 million (2022: GBP3.0 million) of extra
income driven by the impact of inflation on both indexed-linked and
open market value ("OMV") reviews. In the quarter PHP settled 49
OMV reviews, including 20 nil increases, resulting in an additional
GBP0.4 million (Q1 2022: GBP0.4 million on 67 OMV reviews) of
income equivalent to 2.0% (2022: 1.5%) per annum with most of the
OMV reviews still relating to periods when inflation was relatively
muted.
A further GBP0.1 million (Q1 2022: GBP0.3 million) has been
generated in the quarter from asset management activities where the
Company exchanged three new projects which are due to start on site
shortly. Currently there are ten projects on site which, in
addition to extending lease lengths and increasing rents, will
improve the environmental performance of the buildings.
Axis Technical Services Limited ("Axis")
As previously reported, in January 2023, the Group successfully
completed the acquisition of Axis, an Irish property management
business, and signed a long-term development pipeline agreement
providing access to a pipeline of future primary care projects in
Ireland.
Since the acquisition, Axis has performed in line with
management's expectations and PHP has successfully migrated all
asset and property management activities in Ireland to the Axis
team, who have already identified several new potential asset
management initiatives across the portfolio which are being
actively progressed.
Investment and development
The Group continues to adopt a very disciplined approach to
further investment and development activity, which will only take
place if accretive to earnings. Future pipeline of opportunities
continues to be focused predominantly on Ireland and PHP's existing
portfolio through asset management projects.
Currently there is limited exposure to development risk with
just one scheme on-site presently. The Group is in the process of
renegotiating rental values with several Integrated Care Boards
across the UK to restore the financial viability of schemes in our
pipeline, given the current economic and interest rate
environment.
Financing
As at 31 March 2023 the Group's net debt stood at GBP1,273.3
million (31 December 2022: GBP1,261.3 million) and on a pro-forma
basis the Loan to Value ("LTV") ratio was 45.5% (31 December 2022:
45.1%). The Group has GBP321 million (31 December 2022: GBP326
million) of undrawn loan facilities available, net of capital
commitments.
On 18 April 2023, the Group converted EUR60.0 million (GBP52.9
million) of sterling equivalent denominated debt into euros across
its various revolving credit facilities to cover a small unhedged
euro denominated balance sheet exposure which had arisen primarily
because of historic valuation gains and retained earnings arising
on our portfolio in Ireland. As part of the transaction the Group
took advantage of cheaper euro denominated interest rates and
purchased 2.0% caps on EUR60m nominal value for a period of 2.5
years for an all-in premium of EUR2.2 million (GBP1.9 million). The
above transaction is expected to reduce the Group's average cost of
debt by around 9bps over the next 2.5 years and increase the
proportion of net debt that is fixed or hedged to 97% (31 December
2022: 94%).
Dividend
On 23 March 2023, the Company declared its second quarterly
interim dividend of 1.675p per Ordinary Share which will be paid on
19 May 2023 to shareholders who were on the share register at the
close of business on 30 March 2023. The dividend will be paid by
way of a property income distribution of 1.34 pence and normal
dividend of 0.335 pence. The dividend is equivalent to 6.7p on an
annualised basis and represents a 3.1% increase over 6.5p paid in
2022.
The Company intends to maintain its strategy of paying a
progressive dividend, in equal quarterly instalments, covered by
underlying earnings in each financial year. Further dividend
payments are planned to be made in August and November 2023.
Annual General Meeting ("AGM")
The 2023 AGM of the Company is being held today at 10:30am at
the offices of CMS Cameron McKenna Nabarro Olswang LLP, Cannon
Place, 78 Cannon Street, London EC4 6AF. At the meeting
shareholders will be able to interact with the Directors who will
answer any questions and provide their thoughts on our performance
and strategy. Further details of the AGM including the Notice of
Annual General Meeting can be found on the Company's website
www.phpgroup.co.uk.
More information on Primary Health Properties PLC can be found
on www.phpgroup.co.uk.
Harry Hyman, Chief Executive Officer of Primary Health
Properties, commented:
"The first quarter of 2023 has seen a good start to the year for
PHP and as previously reported, we believe the favourable dynamics
of higher inflation and increased build costs combined with a
demand for new primary care facilities and the need to modernise
the estate will continue to increase future rental settlements.
"We continue to focus on income growth from our existing
portfolio and are encouraged by the growth seen in the first
quarter of the year. Furthermore, with the majority 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."
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/Jamie Hooper/Hannah Ratcliff/Verity
Parker
Buchanan Communications
T: +44 (0) 20 7466 5066
E: php@buchanan.uk.com
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Legal Entity Identifier: 213800Y5CJHXOATK7X11
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END
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