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• Net Rental Income: Increased by GBP4.3 million to GBP153.6 million, driven by rent reviews and asset management activities.

• Adjusted Earnings: Just under GBP93 million, with adjusted earnings per share at 7p.

• Dividend: Fully covered dividend of 6.9p, a 3% increase over the previous year.

• Revaluation Deficit: GBP38 million, with the investment property portfolio valued at GBP2.75 billion.

• Loan-to-Value (LTV): Slight increase to 48.1%.

• Occupancy Rate: Over 99%.

• Average Cost of Debt: 3.4%, expected to rise to 3.6% after repaying the convertible bond.

• Rental Growth: Like-for-like rental growth of 3.2%, with rent reviews contributing GBP3.2 million in additional income.

• Recent Acquisition: Laya Health and Wellbeing Clinic in Cork, Ireland, for EUR22 million with an earnings yield of 7.1%.

• Pipeline in Ireland: Significant opportunities with a focus on government-backed cash flows.

• Warning! GuruFocus has detected 7 Warning Signs with FRA:PP51.

Release Date: February 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Primary Health Properties PLC (FRA:PP51) reported strong financial results for FY24, slightly ahead of market consensus.

• The company announced a significant acquisition in Ireland, the Laya Health and Wellbeing Clinic in Cork, which is expected to yield 7.1% and was funded from existing resources.

• PHP has a nearly 30-year track record of dividend growth, currently yielding close to 8%, and remains committed to continuing this trend.

• The company maintains a high occupancy rate close to 100%, with a secure income stream, 90% of which is government-backed.

• PHP has significant firepower with GBP271 million of undrawn headroom, allowing for future investments and acquisitions.

Negative Points

• The company faced a revaluation deficit of GBP38 million, reflecting valuation declines in the first half of the year.

• There are concerns about the potential impact of lease length reductions on valuations, although management remains confident.

• The interest rate environment remains volatile, which could impact future refinancing and debt costs.

• PHP's administrative costs increased due to a redundancy program, although this is expected to lead to cost savings in the future.

• There is a risk that the UK government's 10-year health plan may not result in immediate changes or investments, potentially delaying growth opportunities.

Q & A Highlights

Q: Can you provide insights on the sentiment among GPs regarding potential deals and acquisitions? A: Mark Davies, CEO: Many primary care medical centers are owned by GPs who initially mortgaged these properties. As these mortgages, often long-term and low-cost, come to an end, GPs face a decision in a higher interest rate environment. This situation creates opportunities for us, as GPs may prefer to sell rather than refinance. These negotiations can take time, but we expect a steady pipeline of opportunities as these loans mature over the next five years.