PHP well placed to weather Covid-19 crisis

Specialist healthcare REIT Primary Health Properties (PHP) said today that it was in a strong position to weather the current Covid-19 crisis.

In a trading update for the three months to 31 March, the company said it was actively working with the NHS, HSE and its GP tenants to help better use its properties in the front line of the pandemic.

In the short-term, it said rental collection remained robust. The majority of rental income, some 90%, is government backed with the balance mainly coming from co-located pharmacies. As of 31 March, 79% of Q1 rent had been received, which is in line with Q1 2019.

The group also reassured investors that it has sufficient liquidity. Net debt stood at £1,086.0m (31 December 2019: £1,067.3m) on 31 March and, on a pro-forma basis, the Loan to Value (LTV) ratio was 44.8% (31 December: 44.2%). After capital commitments, the Group has undrawn loan facilities and cash on deposit totalling £341.1m (31 December 2019: £356.6m). It said its portfolio would need to fall in value by around £1bn or 42% for the LTV covenants in its borrowing arrangements to come under risk of being breached.

It is not yet clear if the UK government will close construction sites as the pandemic progresses. PHP currently has three developments on-site in Ireland and a further four on-site in the UK with a net development cost of £56m.

With the exception of Banagher, closed due to Irish Government guidelines, and Epsom, which has not yet commenced, all currently remain open. The sites at Bray and Rialto have been awarded special dispensation to remain open and completion is due imminently.

In the longer term, PHP said its pipeline remains active and it expects the Covid-19 crisis to highlight the important role primary healthcare plays in the provision of healthcare services, in particular the continuing movement of services away from overburdened hospital settings.

Managing director Harry Hyman said: ‘Despite the uncertainty created around the world by the Covid-19 pandemic, our portfolio of properties stands on the front-line of delivering vital services for the NHS and HSE in the UK and Ireland and we are working closely with our occupiers to help them better utilise our assets during this global time of need.

‘Whilst it is too early to understand in full the financial implications of the crisis, we remain in a very strong and robust position, with a well-funded balance sheet and excellent portfolio of assets, which will help underpin our strategy of paying a progressive dividend to shareholders which is fully covered by earnings.’

The quarterly dividend of 1.475p per share declared on 24 March will be paid on 22 May.