Primary Health Properties (PHP) H2 2024 earnings summary

Executive summary

• Delivered strong FY24 results, slightly ahead of market consensus, with robust operational and financial performance, profit and dividend growth, and stabilisation of property valuations in H2.

• Achieved consistent rental and dividend growth, underpinned by nearly 100% occupancy and government-backed income streams, marking the 29th consecutive year of dividend increases.

• Announced a significant acquisition in Ireland (Laya Health & Wellbeing Clinic, Cork) for €22 million at a 7.1% yield, funded from existing resources.

• Maintains a market-leading platform with high barriers to entry, strong stakeholder relationships, and disciplined investment and management.

• Positioned to benefit from demographic tailwinds, government policy shifts, and the upcoming 10-year NHS plan prioritizing primary care.

Financial highlights

• Net rental income rose by 2.9% year-over-year to £153.6m, driven by rent reviews and asset management.

• Adjusted earnings reached £92.9m; adjusted EPS was 7.0p, supporting a fully covered dividend of 6.9p (up 3% YoY).

• Like-for-like rental growth was 3.2%, up 70bps on 2023 and over 100bps on 2022.

• Investment property portfolio valued at £2.75bn; NAV stable at 105p.

• LTV increased to 48.1% due to valuation declines and higher net debt.

Outlook and guidance

• Expects continued rental and dividend growth, supported by government policy and demographic trends, with asset management projects delivering 15%-20% rent increases.

• Sees significant opportunity in both UK and Ireland, with a robust pipeline and risk-controlled development approach.

• Dividend remains a priority, with earnings growth guiding future capital allocation.

• Anticipates the 10-year NHS plan and Labour Government's commitment to primary care will accelerate growth and shareholder returns.

• Rental growth outlook remains positive, with further improvement expected in 2025 as yield expansion moderates.