Healthcare-based REIT Primary Health Properties PLC (LSE:PHP, OTC:PHPRF) reported net rental income of £149.3 million for 2023, a 5.5% increase from £141.5 million in 2022.
This growth was underpinned by rent reviews and asset management activities, which contributed an extra £4.3 million in the year.
Adjusted earnings rose 2.3% to £90.7 million, with adjusted earnings per share (EPS) increasing 3% to 6.8p.
On a reported basis, profit for the year fell to £27.3 million from £56.3 million in the previous year, with EPS halving to 4.2p, reflecting the broader economic volatility affecting the real estate sector.
PHP increased the dividend payment by 3.1% to 6.7p at 101% cover.
In addition, PHP' said its portfolio remained strong with a net initial yield (NIY) of 5.05%, and contracted rent roll increasing by 3.8% to £150.8 million.
The company also reported a weighted average unexpired lease term (WAULT) of 10.2 years, maintaining near-full occupancy at 99.3% and ensuring that 89% of the rent roll is government-funded.
In his final annual statement as chairman before retiring, chairman Stephen Owen said it was “another year of robust operational and financial performance despite the ongoing volatility in the economic and interest rate outlook caused by both global and domestic events”.
He acknowledged that “the volatile interest rate outlook has continued to weigh heavily on the real estate sector during 2023 and early part of 2024”, but “against this backdrop, the performance in the year was a testament to the quality of PHP's business model, portfolio, management team and people”.
Looking ahead, PHP's outlook remains optimistic, with operations in the immediate future focused on increasing income from the group’s existing portfolio.
“We are encouraged by the firmer tone of rental growth experienced in 2022 and 2023,” said Owen.
“We believe the favourable dynamics of inflation over the last two years and increased build costs combined with a demand for new primary care facilities and the need to modernise the estate will continue to increase future rental settlements.”
Board changes
In addition to the trading update, Primary Health announced that Dr Bandhana (Bina) Rawal had joined the board as an independent non-executive director.
Bina is a medical professional with 25 years of senior executive experience in healthcare, including with blue chip pharmaceutical companies such as Roche and global research funding charity Wellcome Trust.