Primary Health Properties increases dividend again as earnings grow

Primary Health Properties has reported a 4.1% fall in EPRA net tangible assets (NTA) to 108.0p in annual results to 31 December 2023, however, earnings were up 3.0% to 6.8p per share.

[QD comment: This value decline, earnings growth dynamic typifies the state of play in the real estate sector and we expect it will be replicated in many results over the coming weeks.]

Contracted annualised rent roll increased by 3.8% to £150.8m (31 December 2022: £145.3 million). The increase in earnings has allowed the company to pay a greater dividend.

2023 dividends totaled 6.7 pence (2022: 6.5 pence), a 3.1% increase over 2022. First quarterly dividend for 2024 of 1.725 pence has been declared, equivalent to 6.9 pence on an annualised basis and a 3.0% increase over the 2023 dividend per share, marking the company’s 28th consecutive year of dividend growth

The group’s portfolio was valued at £2.779bn at 31 December 2023 (31 December 2022: £2.796bn) reflecting a net initial yield of 5.05% (31 December 2022: 4.82%). The revaluation deficit of £53.0m represented a decline of 1.9% driven by net initial yield widening 23 basis points (bps – equivalent of 0.23%) resulting in a fall in the value of the portfolio of around £128m partially offset by gains of £75m arising from rental growth and asset management projects

The company maintained one of the lowest cost ratios in the UK REIT sector, with an EPRA cost ratio of 10.7% (2022: 9.9%).

Occupancy was high at 99.3% (2022: 99.7%), with a WAULT of 10.2 years (2022: 11.0 years) and 89% (2022: 89%) of income funded by government bodies.

Balance sheet

  • LTV ratio of 47.0% (2022: 45.1%), within the group’s targeted range of between 40% to 50%
  • 97% (2022: 94%) of net debt fixed or hedged for a weighted average period of just under seven years
  • Weighted average debt maturity 6.6 years (2022: 7.3 years)
  • Cash and undrawn loan facilities totaling £321.2m (2022: £325.9m) after capital commitments


Harry Hyman, chief executive, commented: “We are encouraged by the organic rental growth achieved in 2023, resulting in another record year with an additional £4.3 million generated from our rent review and asset management activities. The strong rental growth in the year has been reflected in the positive total property return, significantly ahead of the wider property market.

“Furthermore, with over 97% of PHP’s debt either fixed or hedged, a strong control on costs, significant liquidity headroom and just one development on site we have limited exposure to further cost increases and development risk.

“The high quality of PHP’s portfolio reflects the security and longevity of our income with 89% government funded, near full occupancy and continued rental growth which are key drivers of our predictable cash-flows and underpin our progressive dividend policy with 28 years of continued growth. With a market leading portfolio across the UK, and increasingly in Ireland, we are well positioned for long-term success.”

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