Primary Health Properties rent income rises in first quarter

The FTSE 250 company said it also generated £1.2m of income from 101 rent reviews that had been settled, equivalent to 3.7% on an annualised basis.

Over the course of 2023, the group said it expected rent reviews to generate around £4m of extra income.

In January 2023, PHP acquired Irish property management business Axis, and signed a long-term development pipeline agreement providing access to a pipeline of future primary care projects in Ireland.

Since the acquisition, Axis had performed in line with management's expectations, and PHP said it had successfully migrated all asset and property management activities in Ireland to the Axis team.

The group was adopting a “very disciplined approach” to investment and development activity, which the board said would only take place if accretive to earnings.

Currently, there was limited exposure to development risk, with just one scheme on-site at present.

As at 31 March, PHP's net debt stood at £1.27bn, with a loan-to-value ratio of 45.5%.

The group said it had £321m of undrawn loan facilities available, net of capital commitments.

Additionally, it converted €60m of sterling-equivalent denominated debt into euros across its various revolving credit facilities, with the expectation that it would reduce its average cost of debt by around nine-basis points over the next 2.5 years.

PHP declared its second quarterly interim dividend of 1.675p per ordinary share, equivalent to 6.7p on an annualised basis, representing a 3.1% increase over 6.5p paid in 2022.

The firm said it intended to maintain its strategy of paying a progressive dividend, in equal quarterly instalments, covered by underlying earnings in each financial year, with further dividend payments planned to be made in August and November.

“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,” said chief executive officer Harry Hyman.

“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.”

At 1054 BST, shares in Primary Health Properties were down 0.85% at 104.7p.

Reporting by Josh White for Sharecast.com.