- Earnings up 6.6%, 27th consecutive dividend increase
- Economic uncertainty dampens investment plans
- Irish property management acquisition
Investor in primary health facilities Primary Health Properties (PHP) increased adjusted earnings by 6.6% in the year to 31 December 2022 while the dividend was raised by 5.2% marking the 27th consecutive year of dividend growth.
However, the company gave a cautious outlook saying investment activity remained at low levels.
‘For both the primary care and indeed most commercial property markets, the high levels of financial and interest rate volatility seen in the last quarter of 2022 and resulting economic uncertainty have encouraged a wait and see attitude amongst investors until the outlook settles down.’
The deteriorating interest rate and economic outlook has also caused the company to reconsider its acquisition pipeline and pause investment activity.
The shares fell 1.4% to 107.3p taking the loss over the last year to around 19%.
A RESILIENT PERFORMANCE IN 2022
Last year was a record for absolute rental growth, which increased 2.4% driven by rent reviews and asset management projects, although the company highlights that ‘most of this growth came from rent reviews arising in the period 2018 to 2020 and therefore does not reflect the impact of significantly higher construction costs experienced in the last few years.’
The property portfolio was valued at £2.8 billion at the period end reflecting a rental yield of 4.82% compared with 4.64% in 2021. It spans 513 assets including 20 in Ireland and has a rent roll of £145.3 million.
The group added four assets and took advantage of strong market conditions in the first half to dispose of 13 assets at 13% above book value.
LATEST ACQUISITION
In January 2023 the group completed the purchase of Irish property management business Axis Technical Services which manages a portfolio of over 30 properties.
The company said Axis has a strong pipeline oof near term projects with an estimated gross development value of €50 million and ‘further potential schemes beyond that’.
