Primary Health Props PHP Interim Management Statement

  Primary Health Props (PHP) - Interim Management Statement

RNS Number : 1682R
Primary Health Properties PLC
15 November 2012
 



                        PRIMARY HEALTH PROPERTIES PLC

                                       

      A specialist REIT providing Primary Care Accommodation for the NHS

                         Interim Management Statement

Primary Health Properties PLC ("PHP", the "Group" or the "Company") one of the
largest providers of  modern primary healthcare  facilities, today issues  its 
Interim Management Statement for the period from 1st July to 15 November 2012.

Highlights

·    Successful completion of retail  bond issue raising £75million  unsecured 
finance at 5.375% for 7 year term

·    Acquisitions and commitments totalling £29.5million announced

·    Portfolio continues to be 100% let

·    Annualised passing rent roll, including commitments, was £34.9million  at 
15 November (£33.2million at 30 June 2012)

·    There  is  a  continued  pipeline  of  attractive  property   acquisition 
opportunities

·    Deals in solicitors hands have a gross asset value of over £106million

·    Interim dividend  of 9.25p  per  share was  paid  to shareholders  on  28 
October 2012; total of 18.5p per share paid in 2012 (2011: 18.0p)

 

Borrowings and Banking facilities

As announced on 24  July 2012, the  Group completed the issue  of a new  seven 
year,  £75  million  unsecured  retail  bond.  The  Board  welcomes  the   new 
stakeholders this brings to the Group.

Following the  retail bond  issue,  total facilities  available to  the  Group 
amount to £459million with  drawn borrowings currently totalling  £329million. 
Contracted  commitments  to  forward  fund  and  acquire  future  assets   are 
£16million, giving  the  Group  head  room  of  £114million  to  fund  further 
acquisitions. 

The £27million debt facility provided by Allied Irish Banks ("AIB") as part of
the Group's historic core facilities will be allowed to run its course to  its 
maturity date of 31 January 2013. The structure of the continuing provision of
existing interest rate swaps procured from AIB to mitigate interest rate  risk 
across the Group's wider bank debt portfolio is being finalised.

Upon maturity, the AIB  loan will initially be  refinanced from existing  debt 
resources, however, discussions continue with new debt providers to secure new
facilities to replace AIB and facilitate  the future expansion of the  Group's 
portfolio. 

Interest Rate hedging

The total mark to model liability of the derivative portfolio was estimated at
£52.4million  as  at  30 September  2012,  an  increase  from  its  value   of 
£49.3million at  30 June  2012.   This movement  has  been caused  by  further 
reduction in  longer term  interest rates  as global  economic markets  remain 
weak.

Property portfolio

The Group has secured a number of new investment properties in the period:

Asset                      Acquisition basis         Acquisition cost Size sqm
Luton, Bedfordshire        Standing Let Investment       £3.9 million    1,281
Stourbridge, West Midlands Forward           Funding     £8.5 million    2,600
                           Commitment
Newton Abbot, Devon        Forward           Funding     £3.0 million    1,373
                           Commitment
Rotherham                  Standing Let Investment      £14.1 million    4,636

Transactions with a gross asset value  of some £106million are in  solicitors' 
hands, to acquire further investment properties located across mainland United
Kingdom. Some of these will be acquired as portfolios with associated debt  of 
various durations totalling some £50million,  which reduces the cash  required 
of PHP to complete these acquisitions.

The Group continues to  appraise a strong  pipeline of attractive  acquisition 
opportunities, a mix of further  forward funding commitments to acquire  newly 
developed assets and standing let investments, all of which would be accretive
to overall rent roll and Group profitability.

The Directors believe that  initial property yields  in the Group's  portfolio 
have remained stable  at approximately 5.74%  in the period  under review,  as 
demand continues from property investors in all sectors for quality assets let
to strong  covenants.   The next  valuation  of the  freehold,  leasehold  and 
development properties of  the Group  will be carried  out as  at 31  December 
2012.

The forward funding commitments at Allesley Park and Pelton have both recently
achieved practical completion  and become rent  producing.  The Group's  other 
existing commitments are proceeding in line with their planned timetables.

Rent roll and rental growth

Annualised passing  rent roll  of the  Group's completed  portfolio as  at  15 
November 2012 was  £33.5 million (30  June 2012-  £31.4million), the  increase 
being due to deliveries and rent reviews completed in the period.

Average rental growth achieved  on rent reviews completed  to 31 October  2012 
showed an annualised rate of 2.5%.  This is lower than that achieved for  2011 
of 3.0%  but is  satisfactory when  analysed  in the  context of  the  current 
economic climate.

Outlook

Having completed  the  refinance  of  the Group's  core  debt  facilities  and 
obtained new  funds from  the unsecured  retail bond,  the Group  is now  well 
positioned to add to its portfolio at yields which exceed its marginal cost of
funding.  This will enable the Group to re-establish 100% dividend cover which
remains management's top priority.

The amount of transactions in  lawyers' hands is higher  than it has been  for 
some time and  when these deals  are completed further  announcements will  be 
made.

 

 

 

For further information contact

Harry Hyman/Phil Holland

Primary Health Properties PLC

T:  +44(0)20 7451 7050

harry.hyman@nexusgroup.co.uk/phil.holland@nexusgroup.co.uk

 

David Rydell/Victoria Geoghegan/Elizabeth Snow

Pelham Bell Pottinger

T: +44(0) 20 7861 3232

 

This interim management statement may  contain forward looking statements.  By 
their nature forward looking statements  involve risk and uncertainty  because 
they relate to future events and circumstances.

These statements reflect  the knowledge  and information  at the  time of  the 
release  of  this  interim  management  statement.  Nothing  in  this  Interim 
Management Statement should be construed as  a profit forecast or estimate

Apart from  the information  contained in  this Interim  Management  statement 
there have been no material events or transactions affecting the Group  during 
the period.

 

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           The company news service from the London Stock Exchange
 
END
 
 
IMSGGGMPGUPPGRC -0- Nov/15/2012 07:00 GMT