Primary Health Properties PLC
Preliminary results for the year ended 31 December 2024
29-year track record of dividend growth set to continue as new Government commitment to primary and community care and further progress in Irish markets drive future growth
Primary Health Properties PLC (“PHP”, the “Group” or the “Company”), a leading investor in modern primary health facilities in the UK and Ireland, announces its audited preliminary results for the year ended 31 December 2024.
Mark Davies, Chief Executive Officer (“CEO”) of PHP, commented:
“This is my first year-end since taking over as CEO last year and its pleasing to report a solid set of results that are slightly ahead of market consensus. I am very pleased to report such a positive financial performance, particularly in the second half of the year, with good momentum in rental and earnings growth. Encouragingly, we have also seen positive valuation growth in the second half of the year, the first time since 2021, which has led to stability in our Adjusted NTA per share. The dividend per share has continued to grow by 3% and remains fully covered.
“Now that valuations have stabilised and look set to improve as rental growth accelerates we are seeing more opportunities to acquire earnings accretive acquisitions and this was demonstrated by our acquisition in Ireland of the Laya Healthcare urgent care and diagnostic facility at a yield of 7.1%.
“I have been impressed by the hard work and dedication of my colleagues along with the depth of knowledge and our relationships in both the UK and Irish healthcare markets. This gives us great confidence about the future of our business and that we can continue to deliver strong financial results and sector leading performance, especially with the demographic tailwinds and political support for primary care in both countries.
“We are approaching PHP’s 30-year anniversary with a dedicated determination to continue growing our dividend on a fully covered basis.”
FINANCIAL AND OPERATIONAL HIGHLIGHTS
| Income statement metrics | Year to 31 December 2024 | Year to 31 December 2023 | Annual change |
| Net rental income1 | £153.6m | £149.3m | +2.9% |
| Adjusted earnings1,2 | £92.9m | £90.7m | +2.4% |
| Adjusted earnings per share1,2 | 7.0p | 6.8p | +2.9% |
| IFRS profit after tax for the year | £41.4m | £27.3m | +51.6% |
| IFRS earnings per share2 | 3.1p | 2.0p | +55.0% |
| Dividends | |||
| Dividend per share5 | 6.9p | 6.7p | +3.0% |
| Dividends paid5 | £92.1m | £89.5m | +2.9% |
| Dividend cover1 | 101% | 101% | |
| Balance sheet and operational metrics | 31 December 2024 | 31 December 2023 | Annual change |
| Adjusted NTA (NAV) per share1,3 | 105.0p | 108.0p | -2.8% |
| IFRS NTA per share1,3 | 103.0p | 106.5p | -3.3% |
| Property portfolio | |||
| Investment portfolio valuation4 | £2.750bn | £2.779bn | -1.4% |
| Net initial yield (“NIY”)1 | 5.22% | 5.05% | +17 bps |
| Contracted rent roll (annualised)1,7 | £153.9m | £150.8m | +2.1% |
| Weighted average unexpired lease term (“WAULT”)1 | 9.4 years | 10.2 years | -0.8 years |
| Occupancy1 | 99.1% | 99.3% | -20 bps |
| Rent-roll funded by government bodies1 | 89% | 89% | |
| Debt | |||
| Average cost of debt1 | 3.4% | 3.3% | +10 bps |
| Loan to value ratio1 | 48.1% | 47.0% | +110 bps |
| Weighted average debt maturity – drawn facilities | 5.7 years | 6.6 years | -0.9 years |
| Total undrawn loan facilities and cash6 | £270.9m | £321.2m |
1 Items marked with this footnote are alternative performance measures. Refer to the Glossary of Terms for a description of these measures and a reconciliation to the nearest statutory metric where appropriate.
2 See note 8, earnings per share, to the financial statements. Per share figures are presented on a basic basis.
3 See note 8, net asset value per share, to the financial statements. Adjusted net tangible assets, EPRA net tangible assets (“NTA”), EPRA net disposal value (“NDV”) and EPRA net reinstatement value (“NRV”) are considered to be alternative performance measures. The Group has determined that adjusted net tangible assets is the most relevant measure.
4 Percentage valuation movement during the year based on the difference between opening and closing valuations of properties after allowing for acquisition costs and capital expenditure.
5 See note 9, dividends, to the financial statements.
6 After deducting the remaining cost to complete contracted acquisitions, properties under development and committed asset management projects.
7 Percentage contracted rent roll increase during the year is based on the annualised uplift achieved from all completed rent reviews and asset management projects.
EARNINGS AND DIVIDENDS
- Adjusted earnings per share increased by 2.9% to 7.0p (2023: 6.8p) marginally ahead of analyst consensus.
- IFRS earnings per share increased by 55.0% to 3.1p (2023: 2.0p) reflecting non-cashflow losses arising on the valuation of the Group’s property portfolio, convertible bond and interest rate derivatives.
- Contracted annualised rent roll increased by 2.1% to £153.9 million (31 December 2023: £150.8 million).
- Additional annualised rental income on a like-for-like basis of £4.0 million or 2.7% from rent reviews and asset management projects (2023: £4.3 million or 3.0%).
- EPRA cost ratio 10.1% (2023: 10.1%), representing one of the lowest in the UK REIT sector.
- Quarterly dividends totalling 6.9 pence (2023: 6.7 pence) per share distributed in the year, a 3.0% increase.
- First quarterly dividend of 1.775 pence per share declared and paid on 21 February 2025, equivalent to 7.1 pence on an annualised basis and a 2.9% increase over the 2024 dividend per share, marking the start of the Company’s 29th consecutive year of dividend growth.
- The Company intends to maintain its strategy of paying a progressive, covered dividend.
NET ASSET VALUE AND PORTFOLIO MANAGEMENT
- Adjusted Net Tangible Assets (“NTA”) per share decreased by 2.8% to 105.0 pence (31 December 2023: 108.0 pence).
- IFRS NTA per share decreased by 3.3% to 103.0 pence (31 December 2023: 106.5 pence).
- Property portfolio valued at £2.750 billion at 31 December 2024 (31 December 2023: £2.779 billion) reflecting a net initial yield of 5.22% (31 December 2023: 5.05%).
- Valuations have stabilised in the second half of the year with a surplus of £1.6 million (H1 2024: deficit of £40 million), with yield expansion starting to moderate and the impact of rental growth outweighing yield shift and we expect this trend to continue in 2025.
- Revaluation deficit in the year of £38.4 million (2023: deficit £53.0 million), representing a decline of -1.4% (2023: -1.9%) driven by NIY widening of 17 bps equivalent to around £101 million partially offset by gains of £63 million arising from rental growth and asset management projects.
- Improving independent valuer ERV growth outlook which increased by 3.2% in the year (2023: 2.5%).
- The portfolio’s metrics continue to reflect the Group’s secure, long-term and predictable income stream with occupancy at 99.1% (31 December 2023: 99.3%), 89% (31 December 2023: 89%) of income funded by government bodies and WAULT of 9.4 years (31 December 2023: 10.2 years) increasing to 10.2 years including agreed transactions.
- Pipeline of 13 asset management projects and lease regears planned over next two years, investing £6.7 million, creating additional rental income of £0.4 million per annum and extending the weighted average unexpired lease term (WAULT) back to over 16 years on these projects.
- Winner of MSCI’s UK Highest 10-Year Risk Adjusted Total Return Award for the third consecutive year in 2023, 2022 and 2021, reflecting PHP’s market leading property performance.
- As previously announced, opportunistic acquisition of one standing let investment at Basingstoke for £4.5 million and commenced work on the Group’s second development at South Kilburn, London for £3.3 million.
- Post period end, acquired the Laya Healthcare facility, Cork, Ireland for €22.0 million / £18.2 million delivering an earnings yield of 7.1%. The private medical facility is let to Laya Healthcare, Ireland’s second largest provider of private health insurance and clinical service.
- At 31 December 2024, the portfolio in Ireland comprises 21 assets, valued at £255 million / €309 million (31 December 2023: £245 million / €282 million). The portfolio in Ireland represents 9% (2023: 9%) of the total portfolio and Ireland continues to represent a core part of PHP’s strategy and preferred area of future growth.
FINANCIAL MANAGEMENT
- Significant liquidity headroom with cash and collateralised undrawn loan facilities totaling £270.9 million (31 December 2023: £321.2 million) after capital commitments, providing the business with flexibility to execute its strategy and address the repayment of the £150 million convertible bond in July 2025.
- Completed the refinancing of £420 million revolving credit facilities mitigating the refinancing risk of debt maturities falling due in 2025 and 2026.
- Average cost of debt increased marginally to 3.4% (2023: 3.3%) following completion of new arrangements taking the Group’s net debt to 100% fixed or hedged (31 December 2023: 97%).
- LTV ratio 48.1% (31 December 2023: 47.0%) within the Group’s targeted range of between 40% to 50%.