TIDMPHP
RNS Number : 2894Y
Primary Health Properties PLC
12 May 2021
Primary Health Properties PLC
("PHP", "Group" or the "Company")
Q1 2021 Trading Update
Primary Health Properties PLC, one of the UK's leading investors
in modern primary healthcare facilities, today publishes a trading
update for the period 1 January 2021 to 31 March 2021 ahead of its
AGM later today.
Throughout the COVID-19 pandemic PHP has successfully worked
with the NHS, HSE and the Group's GP tenants to help them utilise
our properties for deployment in the front line of the current
crisis. Many of the Group's primary care facilities and occupiers
are now in the front-line of delivering COVID-19 vaccines.
Acquisition of Nexus and management internalisation
On 5 January 2021, the Group successfully completed the
internalisation of its management structure with shareholders
representing 99.95% of the votes cast voting in favour of the
internalisation which is anticipated to result in immediate annual
cost savings of approximately GBP4.0 million, equivalent to 0.3
pence per share. The assumption of Nexus's existing management and
overhead costs are anticipated to result in lower ongoing
administrative costs to the Company and the EPRA cost ratio, which
is already among the lowest in the sector, is therefore expected to
fall further.
The management team, systems and procedures acquired with Nexus
have now been successfully integrated into the wider Group.
Direct developments
The acquisition of Nexus also enabled PHP to acquire the
development expertise of Nexus Developments which at completion had
a pipeline of GBP80 million of direct development opportunities at
varying stages of progression.
Over the course of Q1 2021 the Group has continued to make good
progress and increase the number of live projects to four with an
estimated capital value of approximately GBP21 million (5 January
2021: two projects/GBP10 million). The Company expects to be
on-site with two of these projects by early Q1 2022. In addition,
PHP continues to bring forward a wider medium-term pipeline at
various stages of progress across 18 projects with an estimated
capital value of approximately GBP127 million.
Forward funded developments
The Group completed the forward funded development in the period
at Mountain Ash, Wales, on time and within budget at a net
development cost of GBP4.9 million and has a further five
developments currently on site with a net development cost of
GBP42.5 million.
Three developments at Llanbradach, South Wales (GBP2.8 million),
Epsom, Surrey (GBP4.0 million) and Eastbourne, East Sussex (GBP8.4
million) are all due to reach practical completion on schedule and
budget in Q2 2021. The two developments in Ireland at Arklow,
County Wicklow (GBP16.1 million/EUR18.0 million) and Enniscorthy,
County Wexford (GBP11.2 million/EUR12.6 million) continue to
progress on schedule, remain on site and are due to reach practical
completion in Q1 2022 as previously indicated.
Investment and market update
The first quarter of 2021 has been characterised by a lack of
suitable product, strong pricing and a very competitive market
which has resulted in the acquisition of just one standing
investment Shankhill Primary Care Centre, Ireland for EUR3.8
million in March 2021.
Excluding direct developments, we have continued to generate and
grow a strong off-market pipeline of potential acquisitions both in
the UK and Ireland totalling approximately GBP230 million including
GBP63 million in legal due diligence. However, the COVID-19
pandemic has resulted in vendors withdrawing from sales
negotiations, protracted negotiations and due diligence resulting
in delays to completing acquisitions in the year to date.
Rental reviews
PHP has continued to enhance and grow the rental income of its
existing portfolio with 91 rent reviews settled in the first
quarter, increasing rent by GBP0.5 million p.a., with a weighted
average annualised increase of 1.7% (2020: 1.8%).
Asset management projects
Seven asset management projects have been completed and a
further six are currently on site which will increase rental income
by a further GBP0.3 million p.a., investing GBP6.9 million to
enhance and extend existing assets within PHP's portfolio. A strong
pipeline of over 100 similar projects is being progressed to
further increase rental income and extend unexpired occupational
lease terms. The asset management pipeline will require the
investment of approximately GBP48m, generating an additional
GBP1.4m of rental income and extending the WAULT on those premises
back to an average of 16 years.
Rental collection
90% of the Group's contracted rental income is either paid
directly or indirectly by the UK and Irish governments, with the
balance mainly coming from pharmacies co-located at our properties.
Rental collection continues to remain robust and as at 30 April
2021 over 99% of the Q2 FY21 rent had been received and in-line
with the collection rates experienced in 2020.
Financing
As at 31 March 2021 the Group's net debt stood at GBP1,081.3
million (31 December 2020: GBP1,055.7 million) and on a pro-forma
basis the Loan to Value ("LTV") ratio was 41.9% (31 December 2020:
41.0%). After capital commitments the Group has undrawn loan
facilities and cash on deposit totalling GBP335 million (31
December 2020: GBP362 million) providing significant liquidity
headroom.
Dividend
On 25 March 2021 the Company declared its second quarterly
interim dividend of 1.55p per Ordinary Share which will be paid on
21 May 2021 to shareholders who are on the share register at the
close of business on 6 April 2021. The dividend will comprise
entirely a Property Income Distribution ("PID"). The dividend is
equivalent to 6.2p on an annualised basis and represents a 5.1%
increase over 5.9p paid in 2020.
The Company intends to maintain its strategy of paying a
progressive dividend, in equal quarterly instalments, covered by
underlying earnings in each financial year. Further dividend
payments are planned to be made in August and November 2021.
Annual General Meeting ("AGM")
The 2021 AGM will be broadcast today from our offices on 4(th)
Floor, Greener House, 66-68 Haymarket, London SW1Y 4RF. In view of
the ongoing Covid-19 pandemic shareholders will not be permitted to
attend the AGM but instead will be able to make use of the
electronic facilities on offer to participate remotely.
Shareholders will be able to interact with the Directors, provide
their thoughts on our performance and strategy and to answer any
questions. Shareholders will be able to submit questions
immediately before and during the meeting via
https://web.lumiagm.com . Further details of the AGM including the
Notice of Annual General Meeting can be found on the Company's
website www.phpgroup.co.uk . A recording of the event will also be
made available for replay.
Harry Hyman, Chief Executive Officer of Primary Health
Properties, commented:
"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, to
deliver the COVID-19 vaccine and catch-up on the back-log of missed
procedures over the last year.
"We remain in a very strong and robust position and have made
good progress operationally across our rent review and asset
management activities. The COVID-19 pandemic has highlighted the
strength and attractiveness of the Primary Care sector and, with
our active pipeline of both short and medium term development and
acquisition opportunities, the Board remains confident that PHP is
strongly placed to execute its strategy. "
For further information contact:
Further details:
Harry Hyman Richard Howell
Chief Executive Officer Chief Financial Officer
Tel: +44 (0) 20 7451 7050 Tel: +44 (0) 20 7104
5599
David Rydell / Steph Watson / Tilly
Abraham
(Buchanan Communications)
Tel: +44 (0) 20 7466 5000
Legal Entity Identifier: 213800Y5CJHXOATK7X11
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END
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