Primary Health Properties’ pretax profit more than halved over 2023 as even one of the most resilient of the industry’s sectors proved not to be immune to macroeconomic headwinds.
The investor in healthcare facilities posted pretax profit of £26.1m for the 12 months ended 31 December, a 54% fall on last year’s £56.9m.
Primary Health Properties said the deteriorating interest rate environment and economic outlook during 2023 had forced it to rethink its acquisition pipeline and pause investment activity.
The company currently has just one development on site.
The value of the group’s portfolio slipped to £2.78bn from £2.8bn in 2022. A net initial yield shift from 4.82% to 5.05% resulted in a revaluation deficit of £53m last year.
Occupancy levels stood broadly in line year-on-year at 99%, helping keep rental income strong. The firm’s rent roll in 2023 totalled £150.8m, up from £145.3m the year before. Net rental income grew by 5.5% to £149.3m.
Primary Health Properties said it expected rents to continue to grow going forward as the NHS seeks to deliver new, larger primary care facilities and modernise its existing estate.
Harry Hyman, chief executive of Primary Health Properties, noted that the group’s property returns were “significantly” ahead of the wider real estate market.
He said: “We are encouraged by the organic rental growth achieved in 2023, resulting in another record year with an additional £4.3m generated from our rent review and asset management activities.”
Looking ahead, Hyman added: “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.”
Primary Health Properties will pay a dividend of 6.7p per share, up 3.1% year-on-year.
Over the next two years, the company has a pipeline of 23 asset management projects and lease re-gears planned, which will create additional rental income of £800,000 per annum.
The stock was trading broadly flat on the morning of the results being announced, at 89.35p a share.
Photo © Shutterstock
Send feedback to Samantha McClary
Follow Estates Gazette
