LONDON (Alliance News) - Primary Health Properties PLC Wednesday said it has bought or committed to buy three new healthcare premises so far in 2015 despite few opportunities in the market, and is also pursuing a strong pipeline of other opportunities.
In a trading update, the company said it is also seeing improving terms available in debt markets to help fund its proprties, helping to proportionately reduce its cost base, which should boost its earnings and ensure it moves towards fully covering its dividends.
Primary Health buys and manages primary healthcare facilities like GP surgeries, and has so far in 2015 bought an income producing health centre in Wiltshire and two centres in Wales are that expected to be completed next January for a total of GBP15.7 million, meaning its property portfolio now has a combined value of GBP1.05 billion including those under development.
Its annualised contracted rent roll, including the commitments, rose to GBP61.7 million from GBP60.9 million at the end of December, and its portfolio has a weighted average unexpired lease term of 15.2 years.
Net debt stood at GBP662.3 million at the end of March and it has available headroom of GBP95 million. Its loan-to-vale ratio stood at 63.9% at the end of that month.
"Discussions are ongoing with existing and potential new finance partners to look to further lower the overall cost of debt for the group and extend the longevity of available facilities," it said.
Primary Health Properties does face political risk as it manages centres that are used by National Health Service services. However, it thinks next month's UK General Election, which currently looks likely to end with no clear winner and a new coalition government, will prove positive for the NHS.
"The recent release of the different party manifestos has once again emphasised support from all parties for the NHS. Varying levels of commitment to provide additional funding have been made which should support the strategy announced by Simon Stevens in his five year plan for NHS England. This sees GP based primary care continue to be the bedrock of the NHS, augmented by moving more services into the community and integrating them with social and other care services. Further modern, flexible premises such as those provided by Primary Health Properties will be required to achieve this," the company said.
It added that it has seen the first awards made from the Primary Care Infrastructure Fund, established in November 2014 by the government to specifically facilitate enhancement of premises. It said twelve of its properties have been allocated funding from this pool in the first round awards and management is working with its tenants to "ensure that this is utilised effectively".
Primary Health Properties shares were down 0.2% at 400.50 pence Wednesday morning.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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Primary Health (PHP)