Primary Health Properties announced its Q1 2022 Trading Update on Wednesday where the company addressed its Net Zero Carbon Framework and its increase in rental income from its robust pipeline.
Primary Health Properties made significant progress in turning the year-end pipeline into committed agreements, and it has already announced the £34.5m purchase of a huge, state-of-the-art diagnostic centre in Chiswick, rented to HCA Healthcare, and the £6.95m purchase of a clinical facility in Chertsey, rented to the NHS.
Primary Health Properties announced its first Net Zero Carbon (NZC) direct development, a new purpose-built medical centre in Eastergate, West Sussex, with a gross development value of £6.7m, in line with PHP’s NZC Framework.
The project will be one of the first NZC healthcare facilities in the UK, and it highlights its strategic commitment to converting all of its operational, development, and asset management activities to NZC by 2030, as well as assisting its tenants in achieving NZC by 2040.
Primary Health Properties continue to build and grow a robust pipeline totalling £360m in the UK and £122m in Ireland, including standing investments, direct and forward funded developments, and asset management projects, with £65m and £74m in legal due diligence, respectively.
With £0.8 million in increased rental income from the rent review and asset management efforts in the first quarter of 2022, Primary Health Properties generated an additional £0.9m, or 0.6%, compared to the first quarter of 2021.
The group continues to see an increase in rent review growth, with an additional £0.6m in revenue earned in the first quarter from 99 settled reviews, equivalent to 2.0% on an annualised basis, compared to £0.5m and 1.7% in Q1 2021.
Primary Health Properties’ asset management activities generated a further £0.3m in the quarter, the same as in 2021, with the completion of ten projects, and the six schemes on-site that, in addition to extending lease lengths, will improve the environmental performance of the buildings.
The group’s net debt was £1.21bn at the end of March 2022, up from £1.19bn the previous quarter, and the Loan to Value ratio was 43.3% on a proforma basis, compared to 42.9%.
Following capital commitments, Primary Health Properties has £270m in undrawn borrowing facilities and cash on deposit, giving significant liquidity headroom.
For a weighted average period of slightly over nine years, 97% of the group’s net debt is fixed or hedged, offering significant protection from rising interest rates.
Primary Health Properties announced its second quarterly interim dividend of 1.625p per Ordinary Share on March 24, 2022, payable to shareholders on May 20, 2022.
The payout will be fully made up of regular dividends. On an annualised basis, the dividend is equal to 6.5p, a 4.8% increase over the 6.2p given in 2021.
The company aims to keep paying a progressive dividend in equal quarterly instalments, which will be funded by underlying earnings in each fiscal year. In August and November 2022, more dividend payments are expected for Primary Health Properties.
Harry Hyman, CEO of Primary Health Properties, said, “The first quarter of 2022 has seen a good start to the year for PHP good progress converting our year-end pipeline into committed deals along with stronger organic like-for-like rental growth across our rent review and asset management activities, including the environmental upgrades that are required to meet our sustainability targets.”
“We expect to benefit from the current inflationary environment with an improving rental growth outlook and with the majority of our debt fixed or hedged we expect to remain in a very strong and robust position in the current volatile economic environment.”
“In a capital constrained NHS, the access to capital that our business can bring can assist with the increased utilisation of primary care in order to relieve the pressures being placed on healthcare systems, hospitals and A&E departments from demographic drivers and the backlog of procedures missed over the last couple of years following the COVID-19 pandemic. We are proud of the role we play and look forward to continuing to expand our business in the interest of the NHS and all of our stakeholders.”
Primary Health Properties shares fell 0.1% to 147p in closing trade on Wednesday.