REG - Primary Health Props - Q3 Trading Update, Completion of Secondary Listing

Primary Health PropertiesAnnouncement

24/10/2023 08:15

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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
£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.

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 PLC

 T: +44 (0) 7973 344768                                              T: +44 (0) 7766 072272

 E: harry.hyman@phpgroup.co.uk (mailto:harry.hyman@phpgroup.co.uk)   E: richard.howell@phpgroup.co.uk (mailto:richard.howell@phpgroup.co.uk)

 David Rydell/Stephanie Whitmore/ Verity Parker

 Buchanan Communications

 T: +44 (0) 20 7466 5000

 E: php@buchanan.uk.com (mailto: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 £2.8 billion portfolio of healthcare assets that
generate strong, high quality rent roll of just under £150 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/
(https://www.phpgroup.co.uk/)

 

Legal Entity Identifier: 213800Y5CJHXOATK7X11

 

 

 

 

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