Primary Health Properties (PHP) CMD 2024 summary

Strategic vision, direction, and market outlook

• Aims to be the leading owner, manager, and developer of primary care properties, focusing on government-backed secure income in the UK and Ireland, with ambitions to expand into adjacent healthcare sectors and community diagnostics.

• Expects annual rental growth of 3%, supported by open market and CPI-linked reviews, with above-inflation growth targeted over the next five years.

• Political, economic, social, and technological drivers, including government health policy shifts, population growth, and digital transformation, are fueling demand for modern primary care facilities.

• The UK government’s 10-year plan and Ireland’s Sláintecare reforms are increasing investment in primary care infrastructure, emphasizing prevention, digitalization, and community-based care.

• 50% of UK primary care centers are no longer fit for purpose, creating a significant medium-term development opportunity estimated at £3–5bn.

Growth and development initiatives

• Asset management and risk-controlled development are central, with a disciplined approach to project selection, a strong pipeline, and a target yield on cost of 6% and profit on cost of 10%+.

• In Ireland, the ambition is to grow to 15% of the portfolio, with €250 million investment planned over five years and a pipeline including large-scale projects such as Youghal PCC (€15m), Enniscorthy ECC (€20m), and Donnybrook PCC (€40m+).

• Asset management projects have delivered over £1 million in new rent YTD, with recent projects achieving average rent uplifts of 10–20% and setting higher benchmarks for future reviews.

• New developments focus on larger, multifunctional assets, enhanced community care centers, and private sector partnerships.

• Exploring joint ventures and expansion into adjacent sectors to leverage technical expertise and stakeholder relationships.

Financial guidance and performance

• Portfolio has grown from £1.2 billion to £2.8 billion since 2017, with disciplined investment, accretive transactions, and recycling of lower-growth assets.

• 95% of debt is fixed or hedged, with average cost of debt at 3.3%, expected to rise to 3.5% as refinancing occurs; group LTV is 48.1% (target 40–50%).

• Rental growth is projected at 3.0% p.a., with £2.4m additional rent YTD from reviews (7.9% increase over previous passing rent); Ireland’s rent reviews are 100% index-linked and capped at 25% over five years.

• £301m undrawn headroom after capital commitments, with strong investor demand for future refinancing and convertible bond issuance.

• 28 years of consecutive dividend growth, sector-leading EPRA cost ratio, and a resilient business model underpin continued attractive returns to investors.