Primary Health Properties' (LON:PHP) 26 April trading update demonstrated several positive developments in the year to date: continued portfolio and rental growth, new long-term financing, a revision of the advisory agreement with Nexus and a higher quarterly dividend (5.25p annualised vs 5.125p in FY16). Long-term demographic trends and broad political will for healthcare reform continue to support the outlook for primary care property in both the UK and Ireland, and PHP’s long and largely government-backed leases underpin an attractive and fully covered dividend, which we expect to continue its 20-year growth trend.
Income and asset growth
PHP completed 48 rent reviews in Q117, increasing rents by £0.2m or an average of 1.6%, which is an encouraging increase over the 0.9% seen in 2016. PHP has also continued to add to its portfolio, with the acquisitions of two standing let properties near Aberdeen for £7.2m and a second Irish asset for €7.3m. The latter is a 2,900sqm Primary Care Centre in County Cork where the Health Service Executive comprises over 75% of the rent roll. PHP is funding the development, which is expected to be complete in Q317. PHP has one development asset in the UK, which is on track for completion in May, and 297 standing let properties.
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