Primary Health Properties PLC (LON:PHP) said that its March merger with MedicX has already delivered a 22.7% total shareholder return as well as the expected efficiencies.
The FTSE 250 healthcare property investor posted results for the first six months of the year showing adjusted EPRA earnings per share up 12% to 2.8p as net rental income grew 44% to £53.8mln.
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Excluding the impact of the MedicX merger, PHP's adjusted earnings grew £3.2m or 19% to £20.3mln, with the merger contributing a further £7.6mln.
A revaluation surplus of £17.7mln was generated in the period from the portfolio including a £3.2mln surplus on the MedicX assets held for only three and a half months.
Excluding MedicX exceptional adjustments, the IFRS profit before tax was £41.5mln compared to £38.7mln a year ago.
With an 0.8% LFL property valuation gain, the group’s adjusted EPRA net asset value was 105.2p per share at the end of June, up 0.1%, with a 2.8p dividend per share, equating to a 2.8% increase in NAV plus dividends paid.
Chief executive Harry Hyman noted that the company's share price started 2019 at 111p and closed on 30 June at 133.4p, an increase of 20.2%, with the addition of dividends resulting in a total return to shareholders who held the shares throughout the period of 22.7%.
“We have also delivered the operating synergies of £4.0m per annum outlined at the time the merger was announced in January 2019 as well as further finance cost savings,” he added.
Hyman also hailed further selective growth of the portfolio, particularly in Ireland, as well as the new £150mln unsecured convertible bond issue.
Positive outloook
“Continuing improvements to the rental growth outlook and further reductions in the cost of finance will help to maintain our strategy of paying a progressive dividend to our shareholders which is fully covered by earnings,” he said.
Broker Liberum said the broadly flat NAV was 2% ahead of our forecast, while EPS and DPS were "broadly in line".
"Positively, rent reviews have shown further improvement with annualised growth of 1.9%," analysts said, adding that they expect PHP’s portfolio "to continue to benefit from long-term structural growth, driven by a growing and ageing UK population coupled with efforts to improve the efficiency and cost effectiveness of the NHS by expanding the scope of services provided by GPs".