Doctor's surgery landlord Primary Health Properties (PHP) accompanied its full-year figures with the 17th successive year of dividend growth. This explains why the shares remain attractive to income investors and why they trade at a premium over book value.
But dividend cover showed little improvement, at just 57 per cent. The group has continued to finance acquisitions by issuing more shares, the dilutive effects of which have more than offset growth in rental income. In fact, after taking off a £11.4m fair-value gain on derivatives, EPRA earnings per share fell from 8p a share to just 6.6p.
Gross rental income rose by 27 per cent to £42m last year, thanks to the £233m acquisition of Prime Public Partnerships in September. Some 92 per cent of this income is recurring revenue coming from doctors - a highly secure cash flow. However, rental growth slowed from 2.4 per cent to 2.2 per cent; the NHS reforms have slowed rental negotiations. And the PPP acquisition came with £178m of debt - although the first stage of restructuring this is expected to deliver an annual saving of £1.4m.
House broker Peel Hunt is forecasting adjusted net asset value (NAV) of 307p next December (up from 300p in Dec 2013).
PRIMARY HEALTH PROPERTIES (PHP) | ||||
---|---|---|---|---|
ORD PRICE: | 354p | MARKET VALUE: | £393m | |
TOUCH: | 352-255p | 12-MONTH HIGH: | 364p | LOW: 312p |
DIVIDEND YIELD: | 5.4% | TRADING PROPERTIES: | nil | |
PREMIUM TO NAV: | 29% | NET DEBT: | 192% | |
INVESTMENT PROPERTIES: | £941m |
Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2009 | 247 | 10.8 | 26.6 | 17 |
2010 | 262 | 27.2 | 41.3 | 17.5 |
2011 | 246 | 12.6 | 19.0 | 18 |
2012 | 236 | 1.10 | 1.60 | 18.5 |
2013 | 274 | 20.2 | 22.7 | 19 |
% change | +16 | +1,736 | +1,319 | +3 |
Ex-div: 12 Mar Payment: 25 Apr |