TIDMPHP
RNS Number : 4825E
Primary Health Properties PLC
10 April 2014
PRIMARY HEALTH PROPERTIES PLC
A specialist REIT providing Primary Care accommodation to the
NHS
Interim Management Statement
Primary Health Properties PLC ("PHP", the "Group" or the
"Company") the UK's leading investor in modern primary healthcare
facilities, today issues its Interim Management Statement for the
period from 1 January 2014 to 10 April 2014, the date of the
Company's Annual General Meeting.
Highlights
-- Successful completion of stage one of the refinance of the
debt assumed with the acquisition of Prime Public Partnerships
Limited ("PPP") in December 2013
-- Stage two of the PPP refinance agreed and being documented,
including a new GBP50 million debt facility agreed with HSBC
-- Acquired or committed to fund a further three property assets for a total of GBP23 million
-- Total property portfolio with a book value of GBP981 million(1)
-- Weighted average unexpired lease term in portfolio of 16 years
-- Annualised contracted rent roll, including commitments, of GBP59.2 million at 31 March 2014
-- Attractive pipeline of acquisition opportunities
-- Interim dividend of 9.75p per share payable to shareholders on 25 April 2014
________________________
(1) Including properties under development as if completed
Property portfolio
The Group has secured three new acquisitions in the period:
Asset Acquisition Acquisition Size sqm Target completion
basis cost date
------------------- --------------------- ---------------- --------- ------------------
Gorse Stacks, Forward commitment GBP19.0 million 5,754 December 2014
Chester sqm
------------------- --------------------- ---------------- --------- ------------------
Caia Park, Wrexham Forward commitment GBP2.3 million 850 sqm December 2014
------------------- --------------------- ---------------- --------- ------------------
Newton Abbot, Completed investment GBP1.7 million 753 sqm Rent producing
Devon
(Pharmacy unit)
------------------- --------------------- ---------------- --------- ------------------
The Group's portfolio comprises 262 high quality assets with a
total value of GBP981 million. This includes 256 completed assets
and a further six that are currently on site under development. The
next independent valuation of the Group's property portfolio will
be undertaken at the interim date of 30 June 2014.
PHP continues to appraise a strong pipeline of attractive
acquisition opportunities, a mix of further forward commitments to
acquire newly developed assets and standing let investment
acquisitions, all of which would be accretive to Group
profitability and enhance dividend cover.
Rent roll and rental growth
The total contracted rent from the portfolio as at 31 March 2014
stood at GBP59.2 million, up from GBP57.6 million as at 31 December
2013.
Growth from rent reviews has contributed to this increase with
25 reviews completed in the period to 31 March 2014, generating a
total increase in rent of GBP0.1 million. These reviews showed an
annualised rate of growth of 2.0%, as was also achieved on reviews
in 2013.
Borrowings and banking facilities
In the period under review, the Group has completed the first
stage of its refinance of the debt that was assumed as part of the
acquisition of PPP in December 2013. This saw the crystallisation
of an early refinance fee of GBP13.7 million that had been provided
by the vendor within the acquisition pricing, reducing the interest
rate by over 80 basis points with effect from 1 January 2014.
The second stage will refinance a proportion of the debt into a
new GBP50 million, five year revolving facility that has been
agreed with HSBC. This facility will accrue interest at a rate of
between 200 and 225 basis points over LIBOR and will include an
element that will be used to fund forward development
commitments.
The remainder of the PPP debt is to be re-structured with Aviva
to provide amended interest only facilities that will to refinance
the remaining GBP113 million of assumed debt. This will reduce the
applicable rate of interest further below the reduction secured
from January 2014 rate. These changes are currently being
documented.
The Group's current average interest rate, including the effect
of its swap portfolio, is 4.85%. With net debt of GBP608 million as
31 March 2014, Group LTV stood at 63.5%.
Interest rate hedging
The total mark to market liability of the derivative portfolio
was estimated at GBP30.8 million as at 31 March 2014, a small
increase from GBP28.6 million as at 31 December 2013. This increase
has occurred as the shape of the longer-term swap rate curve has
changed. The change in the mark to market valuation has no cash
impact for the Group.
Outlook
The actions taken in 2013 laid a strong foundation to increase
earnings to achieve the number one priority for the Board of
returning the Company to full dividend cover at the earliest
opportunity. The refinance of the debt assumed with the PPP
acquisition has taken a further step in this process. From 30 April
2014, the administrative services will be provided by Nexus along
with property management services, but at a fixed fee that is
greatly reduced from that previously paid with reference to asset
values. This will further enhance earnings in 2014 and beyond.
Harry Hyman, Managing Director, commented:
"We are able to continue to acquire further assets that yield a
satisfactory surplus over PHP's marginal cost of debt and have a
number of projects either on site or being worked through the
approval process that will create additional value and income from
the existing portfolio. Whilst the rental market remains tough,
increases at review are being achieved and will also contribute to
increased earnings to assist in achieving dividend cover.
"The demands on the GP sector and wider NHS continue to grow and
increase the pressure on large parts of the NHS estate that are old
and outdated. The Group is ideally placed to take a lead in the
next phase of development of new, modern specialist primary care
premises demanded by our tenant healthcare professionals, following
the Health & Social Care Act and devolution of budget and
commissioning responsibility to GPs. We continue to look forward to
the future with confidence."
For further information contact
Harry Hyman/Phil Holland
Primary Health Properties PLC
T: +44 (0) 20 7451 7050
harry.hyman@nexusgroup.co.uk/phil.holland@nexusgroup.co.uk
David Rydell/Victoria Geoghegan/Elizabeth Snow
Pelham Bell Pottinger
T: +44 (0) 20 7861 3232
This interim management statement may contain forward-looking
statements. By their nature forward-looking statements involve risk
and uncertainty because they relate to future events and
circumstances.
These statements reflect the knowledge and information at the
time of the release of this interim management statement. Nothing
in this Interim Management Statement should be construed as a
profit forecast or estimate.
Apart from the information contained in this Interim Management
statement there have been no material events or transactions
affecting the Group during the period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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