Primary Health Properties makes 'good progress' in first quarter

Primary Health Properties reported “good progress” in converting its year-end pipeline into committed deals in its first quarter on Wednesday.

The FTSE 250 healthcare property operator said that, Including standing investments, direct and forward-funded developments and asset management projects, it had continued to generate and grow a “strong pipeline” totalling £360m in the UK and €145m (£122m ) in Ireland, of which £65m and €87m was in legal due diligence.

In the quarter, the firm said it generated an additional £0.9m, or 0.6%, of extra rental income from its rent review and asset management activities.

It said it was continuing to see an improvement in growth from rent reviews, with an extra £0.6m of income generated in the quarter from 99 reviews that were settled, equivalent to 2.0% on an annualised basis.

A further £0.3m was generated in the quarter from its asset management activities, completing 10 projects, and the firm said it had a further six schemes currently on site.

As at 31 March, the group's net debt stood at £1.22bn, and on a pro-forma basis the loan-to-value ratio was 43.3%, down from 42.9% at the end of December.

After capital commitments, the group had undrawn loan facilities and cash on deposit totalling £270m, down from £321m at the start of the quarter, but still providing “significant” liquidity headroom.

PHP said 97% of its net debt was fixed or hedged for a weighted average period of just over nine years, providing “significant” protection from increasing interest rates.

“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,” said chief executive officer Harry Hyman.

“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.”