PHP eyesinvestment of €75m in three new medical facilities
Leases to the HSE and other government bodies account for around 75pc of income in Ireland but tenants also include Laya, after the business made a €22m acquisition of the property housing the Laya Health & Wellbeing Clinic, in Cork, earlier this year.
In a trading update yesterday, PHP said it continues to see significant growth opportunities in Ireland driven by sustained Government investment, including the three potential 'forward funded' developments, a model where developers build with an end customer locked in as funder.
'We continue to monitor a number of potential opportunities in Ireland and in particular three forward funded developments with an expected cost of approximately €75m being progressed by our development partner in Ireland,' the trading update said.
PHP CEO Mark Davies has previously said he would like to double the size of the Irish portfolio in the next three to five years. As of June 30, the portfolio in Ireland comprised 22 standing and fully let properties, valued at €340.9m.
Meanwhile, the same trading update showed rent reviews covering 14 of the Irish properties resulted in significant increases of 16pc and an annualised increase of 3.4pc – adding a combined £400,000 (€465,000) to a rent role that had been £2.7m.
PHP had previously argued that the HSE needed to increase the rents it was willing to pay by 'about 20pc' in order for new build projects to be investible.
Mr Davies said PHP's strong operational and financial performance was driven by rental growth across the portfolio, a value-accretive acquisition in Ireland, valuation gains and another period of dividend growth.
'The improving rental growth outlook and a stabilisation of our property yields at 5.25pc signal that we've moved through a key inflexion point in the property cycle with a very encouraging outlook ahead,' he said.
Meanwhile, PHP is pushing ahead with a proposed merger with sector rival Assura.
The combination will create a UK REIT with a £6bn portfolio of long-leased, government-backed healthcare assets.
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