Harry Hyman, Primary Health Properties
Harry Hyman, Primary Health Properties

Primary health facilities investor Primary Health Properties today announced its 2020 results.

The real estate investment trust announced that adjusted earnings per share increased by 5.5% to 5.8p for 2020 (2019: 5.5p) and the average uplift on rent reviews completed in the year was 1.8% per annum.

Additional annualised rental income on a like-for-like basis was £2 million or 1.6%, from rent reviews and asset management projects (2019: £1.9 million or 1.5%) and contracted annualised rent roll increased by 5.9% to £135.2 million (31 December 2019: £127.7 million)

A total of 23 purpose-built medical centres were acquired in 2020 for £58.8 million. Four forward funded developments were also acquired in the year with a net development cost of £34.2 million at Arklow and Enniscorthy in Ireland, Epsom in Surrey and Llanbradach in Wales.

Quarterly dividends totalling 5.9p per share were distributed in the year, a 5.4% increase over 2019 (5.6p per share). The first quarterly dividend of 1.55p per share declared, payable on 26 February 2021, was equivalent to 6.2p on an annualised basis. This represents a further 5.1% increase over the 2020 dividend per share. PCP said it intends to make further dividend payments in May, August and November this year.

The REIT’s adjusted net tangible assets per share increased by 4.6% to 112.9p (31 December 2019: 107.9p).

The property portfolio at the end of 2020 was valued at £2.576 billion (31 December 2019: £2.413 billion) reflecting a net initial yield of 4.81% (31 December 2019: 4.86%). A revaluation surplus was generated in the year of £51.4 million (2019: £49.8 million), representing growth of 2% (2019: 2.1%).

The portfolio in Ireland comprises 18 assets, valued at £198 million, including two forward funded developments currently under construction which, if valued as complete, will increase the total asset value to approximately £220 million.

The group completed the forward funded developments at Athy, Bray, Rialto and Banagher in Ireland during the year and has six developments currently on site with a net development cost of £47.4 million.

PHP reported a strong pipeline of targeted acquisitions and asset management projects with a value of approximately £129 million, of which £59 million is currently under offer, together with additional pipeline from Nexus Developments.

There was progression of asset management projects, with 24 either completed or currently on-site, investing £8.1 million, creating additional rental income of £0.3 million per annum and extending the weighted average unexpired lease term (WAULT) for those leases back to 20 years.

The group has a pipeline of more than 80 incremental asset management projects. The pipeline of projects equates to investing approximately £34 million in 2021 and 2022 generating £1.1 million of additional income and extending the WAULT on those leases back to 21 years.

Of PHP’s contracted rental income, 90% is paid either directly or indirectly by the UK and Irish governments, with the balance mainly coming from pharmacies co-located at its properties.

PHP chief executive Harry Hyman said: “We have continued to support the NHS in the UK, HSE in Ireland, and our GP occupiers throughout the Covid-19 pandemic which has highlighted the demands on health systems around the world. Many of our primary care facilities and occupiers are now in the front line of delivering Covid-19 vaccines. We continue to see demand for extra space to help enable the redirection of activities out of hospitals. The need for modern, integrated, local primary healthcare facilities is becoming ever more pressing in order to relieve the pressures being placed on hospitals and A&E departments.

“In early 2021, we successfully completed the internalisation of the group’s management structure which will immediately deliver material financial and operational benefits driving further earnings and dividend growth, enhancing shareholder returns, whilst simultaneously broadening our appeal to a wider investment community and underpinning the next stage of the company’s growth.”

Sister companies of HealthInvestor UK have an interest in PHP

Date published: February 18, 2021

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