Coronavirus Update

Primary Health Properties PLC- Q1 2021 Trading Update

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Throughout the COVID-19 pandemic PHP has successfully worked with the NHS, HSE and the Group's GP tenants to help them utilise our properties for deployment in the front line of the current crisis. Many of the Group's primary care facilities and occupiers are now in the front-line of delivering COVID-19 vaccines.

Acquisition of Nexus and management internalisation

On 5 January 2021, the Group successfully completed the internalisation of its management structure with shareholders representing 99.95% of the votes cast voting in favour of the internalisation which is anticipated to result in immediate annual cost savings of approximately £4.0 million, equivalent to 0.3 pence per share. The assumption of Nexus's existing management and overhead costs are anticipated to result in lower ongoing administrative costs to the Company and the EPRA cost ratio, which is already among the lowest in the sector, is therefore expected to fall further.

The management team, systems and procedures acquired with Nexus have now been successfully integrated into the wider Group.

Direct developments

The acquisition of Nexus also enabled PHP to acquire the development expertise of Nexus Developments which at completion had a pipeline of £80 million of direct development opportunities at varying stages of progression.

Over the course of Q1 2021 the Group has continued to make good progress and increase the number of live projects to four with an estimated capital value of approximately £21 million (5 January 2021: two projects/£10 million). The Company expects to be on-site with two of these projects by early Q1 2022. In addition, PHP continues to bring forward a wider medium-term pipeline at various stages of progress across 18 projects with an estimated capital value of approximately £127 million.

Forward funded developments

The Group completed the forward funded development in the period at Mountain Ash, Wales, on time and within budget at a net development cost of £4.9 million and has a further five developments currently on site with a net development cost of £42.5 million.

Three developments at Llanbradach, South Wales (£2.8 million), Epsom, Surrey (£4.0 million) and Eastbourne, East Sussex (£8.4 million) are all due to reach practical completion on schedule and budget in Q2 2021. The two developments in Ireland at Arklow, County Wicklow (£16.1 million/€18.0 million) and Enniscorthy, County Wexford (£11.2 million/€12.6 million) continue to progress on schedule, remain on site and are due to reach practical completion in Q1 2022 as previously indicated.

Investment and market update

The first quarter of 2021 has been characterised by a lack of suitable product, strong pricing and a very competitive market which has resulted in the acquisition of just one standing investment Shankhill Primary Care Centre, Ireland for €3.8 million in March 2021.

Excluding direct developments, we have continued to generate and grow a strong off-market pipeline of potential acquisitions both in the UK and Ireland totalling approximately £230 million including £63 million in legal due diligence. However, the COVID-19 pandemic has resulted in vendors withdrawing from sales negotiations, protracted negotiations and due diligence resulting in delays to completing acquisitions in the year to date.


Rental reviews

PHP has continued to enhance and grow the rental income of its existing portfolio with 91 rent reviews settled in the first quarter, increasing rent by £0.5 million p.a., with a weighted average annualised increase of 1.7% (2020: 1.8%).

Asset management projects

Seven asset management projects have been completed and a further six are currently on site which will increase rental income by a further £0.3 million p.a., investing £6.9 million to enhance and extend existing assets within PHP's portfolio. A strong pipeline of over 100 similar projects is being progressed to further increase rental income and extend unexpired occupational lease terms. The asset management pipeline will require the investment of approximately £48m, generating an additional £1.4m of rental income and extending the WAULT on those premises back to an average of 16 years.

Rental collection

90% of the Group's contracted rental income is either paid directly or indirectly by the UK and Irish governments, with the balance mainly coming from pharmacies co-located at our properties. Rental collection continues to remain robust and as at 30 April 2021 over 99% of the Q2 FY21 rent had been received and in-line with the collection rates experienced in 2020.


As at 31 March 2021 the Group's net debt stood at £1,081.3 million (31 December 2020: £1,055.7 million) and on a pro-forma basis the Loan to Value ("LTV") ratio was 41.9% (31 December 2020: 41.0%). After capital commitments the Group has undrawn loan facilities and cash on deposit totalling £335 million (31 December 2020: £362 million) providing significant liquidity headroom.


On 25 March 2021 the Company declared its second quarterly interim dividend of 1.55p per Ordinary Share which will be paid on 21 May 2021 to shareholders who are on the share register at the close of business on 6 April 2021. The dividend will comprise entirely a Property Income Distribution ("PID"). The dividend is equivalent to 6.2p on an annualised basis and represents a 5.1% increase over 5.9p paid in 2020.

The Company intends to maintain its strategy of paying a progressive dividend, in equal quarterly instalments, covered by underlying earnings in each financial year. Further dividend payments are planned to be made in August and November 2021.

Annual General Meeting ("AGM")

The 2021 AGM will be broadcast today from our offices on 4th Floor, Greener House, 66-68 Haymarket, London SW1Y 4RF. In view of the ongoing Covid-19 pandemic shareholders will not be permitted to attend the AGM but instead will be able to make use of the electronic facilities on offer to participate remotely. Shareholders will be able to interact with the Directors, provide their thoughts on our performance and strategy and to answer any questions. Shareholders will be able to submit questions immediately before and during the meeting via . Further details of the AGM including the Notice of Annual General Meeting can be found on the Company's website . A recording of the event will also be made available for replay.



Harry Hyman, Chief Executive Officer of Primary Health Properties, commented:

"The need for modern, integrated, local primary healthcare facilities is becoming ever more pressing in order to relieve the pressures being placed on hospitals and A&E departments, to deliver the COVID-19 vaccine and catch-up on the back-log of missed procedures over the last year.

"We remain in a very strong and robust position and have made good progress operationally across our rent review and asset management activities. The COVID-19 pandemic has highlighted the strength and attractiveness of the Primary Care sector and, with our active pipeline of both short and medium term development and acquisition opportunities, the Board remains confident that PHP is strongly placed to execute its strategy. "